Skip to content


The Workmen of Laxmi Starch Factory Ltd. Vs. Laxmi Starch Factory Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1974)IILLJ84Ker
AppellantThe Workmen of Laxmi Starch Factory Ltd.
RespondentLaxmi Starch Factory Ltd. and anr.
Cases ReferredBurn & Co. Ltd. (Howrah Iron Works) v. Their Employees
Excerpt:
.....be effected, will have to be considered. 11. lastly, the claim of the workmen relates to the production bonus, a scheme of incentive bonus was introduced by the management in the year 1968 under which it was agreed between the management and a section of the workmen concerned directly in the production of some of its products that group efficiency bonus at a specified rate would be paid for quantities produced above a fixed minimum this incentive bonus has been enjoyed only by those workmen included in that group. dealing with this the supreme court said- it is also true that the clerical staff and the subordinate staff do not directly produce goods like manual workers and that may be a reason for treating them somewhat differently in the matter of incentive bonus and that is what..........in the said decision, that it is a matter of discretion for the tribunal to decide, from which date its award should come into operation, and no general rule can be laid down as to the date from which a tribunal should bring its award into force. therefore, it will be seen that when a tribunal gives a direction regarding the date from which it has to become effective, no question of principles, as such, is involved.from the above decisions of this court, it will also be seen that this court has declined to interfere with an award having effect from either the date of demand, or the date of reference, or even a date earlier than the date of reference hut after the date of demand. in fact, the direction given by the tribunal, in the case before us, giving effect to its award from the.....
Judgment:

P. Subramonian Poti, J.

1. An award of the Industrial Tribunal, Alleppey in a dispute between the Management of the Laxmi Starch Factory and its workmen is challenged in these original petitions. The issues referred for adjudication to the Tribunal were-

1. Revision of pay scales.

2. Revision of rates of batta.

3. Grant of night allowance.

4. Increase in D. A.

5. Payment of production bonus.

6. Dress, washing allowance and chappals.

7. Promotion.

There is no challenge now to issues 6 and 7, The reference related only to 11 workmen working in the factory they being drivers, cleaners and a machanic. The Laxmi Starch Factory is a concern engaging more than 200 workers and is engaged in the production of starch, dextrine, glucose, etc. Regarding the drivers, cleaners and machanic there was a long terra agreement which expired on 31-12-1967. Regarding the other categories of workmen also there were long term agreements which were terminated and the demands of such workmen considered. There was settlement pursuant to this, but this settlement did not cover the case of the 11 workmen referred to above and that is why the dispute happened to arise and happened to be referred.

2. The Tribunal's award is challenged by the workmen as well as by the management in the two petitions. According to the workmen as well as the management the Tribunal has not acted properly in reaching its decision embodied in the award.

3. The main dispute concerns the revision of pay scales. The approach to this question is commented by counsel for workmen as perverse. Mention is made in the award to the wage structure in comparable concerns, The workmen relied on the cases of comparable concerns like the Aluminium Industries Limited, Kundra, the Kerala Electrical and Allied Engineering Company Limited, Kundra and the Kerala Ceramics Limited, Kundra. That all these are situate in the same area where the Laxmi Starch Factory is situate is evident and, therefore, if the wage structure in the Industries in the region could be considered to be relevant, necessarily reference may be made to the wage structure in the three concerns mentioned here. But the approach of the Tribunal appears to be that it has not been shown that these are comparable concerns and in order to establish that these are comparable concerns it must be shown that the number of workers, the annual turnover, the paid up capital and investments, the past and future prosperity, the financial stability or debility and the like are more or less identical. It would appear from the award that the Tribunal's attention was also drawn to the wage structure prevalent in a similar industry in Chalakudy. But that too has not been considered apparently for the reason that the management did not adduce evidence that this Chalakudy factory is similar to the Laxmi Starch Factory. In fact, the evidence adduced in the case has not been adverted to. At the same time it would appear that the Tribunal took the view that while there were agreements to cover all other categories of workers it was unfair on the part of the management not to have given a reasonable enhancement in the wages to the drivers, cleaners and the mechanic after the termination of the term of the earlier settlement and the Tribunal, therefore, felt that it would be a 'travesty of justice' not to grant them a reasonable enhancement of their basic pay, D.A. and the other relevant amenities. The proper course which the Tribunal thought it should adopt was 'to raise both the bottom as well as the top of the scale.' Accordingly she scale of drivers and mechanic was revised as 80-5-115-7-150-9-204 while that of the cleaners was revised as 60-4-88-5-118-6-148.

4. This revision of pay scale is challenged by the management on the ground that it is absolutely arbitrary and there is no indication in the award as to why these particular scales should have been adopted. It is quite evident that this argument is well-founded. I sec no reason indicated in the award to support the revised scales. I also see considerable force in the contention of the workmen that the mere fact that industries in the same region are not similar industries would not be sufficient not to advert to the wage structure in those industries. There may be cases where other concerns in the same industry exist in the area in which case the wage structure in those industries may furnish very relevant data. But even if other concerns in the same area are not those relating to the same industry the wage structure in such industries also would be relevant data. That is the very basis of the industry-cum-region-wise formula usually adopted. This question has been considered fairly at length in the decision of this Court in E.I.D. Parry Ltd. v. Industrial Tribunal (1972) K.L.T. 446. The Tribunal was, therefore, in error in failing to advert to the wage structure in the Industries in Kundra in determining the wage structure in the Laxmi Starch Factory. Of course, it goes without saying that the fact that wage structure in other concerns not in the same industry are relevant does not oblige the Tribunal to adopt the same wage structure but that only furnishes necessary data for the Tribunal to make an independent assessment and to reach an independent decision of its own. In so far as the question has not been approached properly by the Tribunal both from the point of view of the management as well as the workmen, the decision on this point calls for interference. The only course is to set aside the award in this regard and direct the Industrial Tribunal to decide the matter afresh in the light of what is stated here.

5. There is a claim for D.A. and that has been accepted finding that (he workers involved in the dispute were entitled to D.A. at the rate of 17 paise per point over and above 400 points of the cost of living index for Quilon per mensem. But regarding the revised pay scale as well as D.A. effect has been given only from 14-7-1969, the date of the reference of the dispute for adjudication to the Tribunal. That, according to the workmen, would not be sufficient. They contend that they are entitled to the revised scale with retrospective effect, namely, from 1-1-1968, the date when the term of the earlier settlement expired. The Tribunal has, no doubt, referred to the question of retrospective effect. But looking at the award closer it would appear that the Tribunal was only considering the question whether to give effect to an adjudication from the date of reference would be prospective operation or whether it would he retrospective operation. That is not the relevant question here. Of course, it is for the Tribunal to decide from what date effect must be given to the pay revision or to the increased D.A. But that being an essential part of the issue for decision, the award must indicate that the mind of the Tribunal has been exercised on this aspect of the matter. The Tribunal should have adverted to the question whether the demand of the workmen that the revised scale of pay and D.A. should come into effect from a date anterior to the date of reference ought to succeed in the circumstances of the case. Normally when the Tribunal takes a decision in the matter, this Court would not interfere and it would be for the Tribunal to use its discretion in giving appropriate relief. But where the Tribunal has failed to exercise its mind on such a question, that may call for interference by this Court. That is because it has not acred properly in the exercise of its jurisdiction to decide the dispute.

6. That retrospectivity could be given in the award of the Tribunal to the benefit of pay revision or D.A. could no longer be a matter in doubt. The Supreme Court has repeatedly pronounced on this. It is sufficient to refer to the decisions of the Supreme Court in Wanger A Co. v. Their Workmen 1963-II L.L.J 403; Hydro (Engrs.) (P.) Ltd. v. Their Workmen 1969-I L.L.J. 713; and Bengal C. & P. Works v. Its Workmen 1969-I L.L.J. 751. In the last of these cases, the Supreme Court said -

Recently in Hydra (Engineers) (Private), Ltd. v. Its Workmen 1969-I L.L.J. 713, this Court declined to interfere with the direction given by the Tribunal that its award should take effect from the date of demand made by the workmen. It has also been pointed out, in the said decision, that it is a matter of discretion for the Tribunal to decide, from which date its award should come into operation, and no general rule can be laid down as to the date from which a Tribunal should bring its award into force. Therefore, it will be seen that when a tribunal gives a direction regarding the date from which it has to become effective, no question of principles, as such, is involved.

From the above decisions of this Court, it will also be seen that this Court has declined to interfere with an award having effect from either the date of demand, or the date of reference, or even a date earlier than the date of reference hut after the date of demand. In fact, the direction given by the Tribunal, in the case before us, giving effect to its award from the date of reference, squarely comes within the decision of this Court in Hindustan Times case 1963-I L.L.J. 108, and, as such, that direction is correct.

7. The Tribunal ought to have, therefore, considered the question whether the revision of pay scales and the grant of D.A. should operate, from a date anterior to the reference but subsequent to the demand by the workmen. Since this question has not been considered, to that extent, the award requires to be reopened and the matter has to be considered afresh by the Tribunal.

8. The question of weightage and fitment in the revised scales of pay would necessarily be comprehendal within the issue 'revision of pay scales' and, therefore, the Tribunal had to consider this when it proposed a revised pay scale. Fitment, of course, it has considered in paragraph 17 of the award and has held that fitment shall be made at the next higher step in the revised grade. The complaint of the workmen is that weightage has not been provided for in the award and that this may create anomalous results.

9. In the original petition it has been averred that the failure of the Tribunal to lay down rules of weightage has resulted in the seniors and juniors getting the same pay as on the date of the operation of the award. This is illustrated with reference to the cases of some of the drivers. Three drivers had reached their maximum in the old scale in 1966 after putting in 18 to 20 years of service and two of the drivers with comparatively lesser service had also reached the maximum by 1969, Under the award, all these five workmen will get the same basic pay as on 14-7-1969. That such anomalous results must, as far as possible, be noticed and met when introducing a scheme of revision of pay scales goes without saying. That is the reason why weightage is one of the matters that a Tribunal should bear in mind when deciding upon a pay scale. I may, in this connection, advert to the decision of the Supreme Court in I.L.C . v. Workmen : (1962)IILLJ744SC , was quoted by the Supreme Court:

A review, therefore, of the cases cited on behalf of the respondents show that generally adjustments are granted when scales of wages are fixed for the first time. But there is nothing in law to prevent the Tribunal from granting adjustment even in cases where previously pay scales were in existence ; but that has to be done sparingly taking into consideration the facts and circumstances of each case. The usual reason for granting adjustment even where wage scales were formerly in existence is that wage scales were particularly low and, therefore, justice required that adjustment should be granted a second time.

This was, no doubt, followed by the following observations of the learned Judge, Jaganmohan Reddy, J.:

This principle in our view recognises that the payment in a graduated wage scale should reflect the years of service of an employee in that grade. When the graduated wage scale is first fixed and a fitment is made therein subsequent revision in wage scales do not require any further fitment because the original fitment will continue to give them the advantage of their service.

The decision concludes on this point in this way.

The decision referred to would clearly indicate, that in each case depending on the facts and circumstances, the question whether any fitments should be made at all or if fitments are to be made, what adjustments should be effected, will have to be considered.

10. The Tribunal has, of course, not considered this question at all and, therefore, now that the matter is going back for consideration on other points, the Tribunal will go into this matter also and record its own independent decision.

11. Lastly, the claim of the workmen relates to the production bonus, A scheme of incentive bonus was introduced by the management in the year 1968 under which it was agreed between the management and a section of the workmen concerned directly in the production of some of its products that group efficiency bonus at a specified rate would be paid for quantities produced above a fixed minimum This incentive bonus has been enjoyed only by those workmen included in that group. The claim of the workmen who are concerned in the Industrial Dispute to payment of production bonus was refuted by the management on the plea that they are not within the scheme of settlement with the workmen for payment of production bonus, that it would not be an incentive bonus in their case as they are not concerned with the production and, therefore, no question of payment of production bonus arises. The Tribunal hits disposed of the claim of the workmen on the only ground that they being not concerned with the production they are not entitled to payment of production bonus by way of incentive. On this the Tribunal is wrong, for, the Supreme Court has said more than once that the question of payment of production bonus need not be limited to those directly concerned with production. Even staff such as those in the establishment as clerks are entitled to production bonus. Necessarily so because the production is as a result of the efforts of not only those who are directly concerned with it. To maintain such production and efficiency those who are not directly so concerned may also be playing their part. I need only advert to the decision of the Supreme Court in Burn & Co. Ltd. (Howrah Iron Works) v. Their Employees 1960- II L.L.J. 261; in support of what I have said here. It was contended in that case that the clerical and subordinate staff have no part to play in the actual production of the goods manufactured by the company and that they should not be given any incentive bonus, particularly because their work does not increase because of the increased production. Dealing with this the Supreme Court said-

It is also true that the clerical staff and the subordinate staff do not directly produce goods like manual workers and that may be a reason for treating them somewhat differently in the matter of incentive bonus and that is what the Tribunal seems to have done, for it has directed the company to extend the scheme of incentive bonus to the clerical and subordinate staff and to lay down the rates and conditions of the same and has not said that exactly the same rates and conditions should apply to the clerical and subordinate staff as apply to the manual workers. But there can be no doubt that economically speaking the clerical staff and the subordinate staff also take part in the production and there is no reason, therefore, for excluding them altogether from the scheme of incentive bonus.

12. Of course, there is the fact that in this case the incentive bonus is a fixed sum related to the excess production and this is shared by the workmen directly concerned. If this is extended to other workmen also it is likely to reduce the incentive bonus paid to those who are directly concerned. Looking at the figures of the incentive bonus drawn for the last few years there is considerable weight in what the counsel for the management points, namely, that it will cease to be an incentive if it is shared by others too. These are not matters which I should decide now. These are matters for decision by the Industrial Tribunal. The approach to this question, as pointed out by me, is wrong. The Tribunal ought not to have held that merely because these workmen are not directly concerned with the manufacture they are not entitled to the production bonus. No doubt, in determining whether the scheme should be extended to the workmen in the light of other factors, the fact that they are not directly concerned would be one of the matters that may have to be looked into. The approach to this question being erroneous, this issue also will have to be looked into by the Tribunal.

13. There are two other points also which have been urged before me and that concerns the night shift allowance and the running batta. There is no material brought to my notice on these questions which calls for any interference with the award.

14. What I have said here has also answered the petition by the management because their only challenge is to the revised scales of pay and according to them if the wage structure in similar concerns in Kundra was taken note of what has now been awarded could not have been awarded. Now that the matter is directed to be reconsidered, that again is a matter for the management to urge before the Tribunal.

15. In the result, the Tribunal's Award is set aside to the extent indicated in the earlier paragraphs of this judgment and the Tribunal is directed to go into those questions which have been reopened by this judgment properly and independently and in the light of the observations made here.

16. Parties are directed to suffer costs in both the petitions.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //