R.A. Mehta, J.
1. These two petitions are filed by workmen of the companies of Sarabhai group against the common judgment and award of the Industrial Tribunal dated 5th August 1980 and published on 21st August 1980 in the Gujarat Government Gazette Part I-L at pages 4540 to 4575. Special Civil Application No. 277 of 1981 is filed by Sarabhai Chemicals Staff Association against Sarabhai Chemicals and Special Civil Application No. 700 of 1981 is filed by Chemical Mazdooor Sabha against (1) Sarabhai Chamicals; (2) Sarabhai Common Services; (3) Sarabhai M. Chemicals; (4) Sarabhai Research Centre; and (5) Suhrid Geigy Ltd. The earlier award in Reference (IT) No. 45 of 1971 was passed in March 1974. The same was terminated on 21st February 1976 and the present demands were raised by the Staff Association on 5th September 1976 and by the Chemical Mazdoor Sabha on 27th May 1977. The demands came to be referred to the Industrial Tribunal by different notifications of Reference between 25th January 1978 and 27th April 1978 and these references are Nos. (IT) 64, 65, 77, 78, 90, 91 and 158 of 1978 as under:
Name Ref. No. Filed on Raised by1. Sarabhai (IT)64/78 25-1-78 ChemicalChemicals Mazdoor Sabha2. Sarabhai (IT) 65/78 27-1-78 Staff Association.Chemicals3. Sarabhai (IT) 77/78 7-2-78 Chemical MazdoorCommon SabhaServices4. Sarabhai M. (IT) 78/78 4-2-78 'Chemicals5. Sarabhai (IT) 90/78 14-2-78 'ResearchCentre6. Suhrid (IT) 91/78 9-2-78 'Geigy7. Synbiotics (IT) 158/78 27-4-78 'Ltd.
These companies are hereinafter referred to as 'Sarabhai Chemicals,' or 'Sarabhai' or 'Company' or 'Management', for the sake of convenience. All these references were tried together by the consent of the parties as common questions of facts and law were involved and by the common judgment and award, the Industrial Tribunal has decided the demands. In Para 2 of the award the Tribunal has observed as follows:
By joint purshises passed by the parties in Reference (IT) Nos. 77, 78, 90 and 91 of 1978, the parties have stated that common questions of facts and law are involved in these References as in the case of Reference (IT) Nos. 64 and 65 of 1978. Therefore, the parties have stated Award made in Reference (IT) Nos. 64 and 65 of 1978, may also be made in those four References. Likewise, the Reference (IT) No 158 of 1978, also, the parties have passed a joint purshis more or less on the same lines, stating that the company will give benefits to the workers as are awarded in Reference (IT) No. 64 of 1978. Award Part-I in that case was made accordingly. In view of these purshises, all these References are disposed of by this common award.
2. In these two petitions also common questions arise and, therefore, they were heard together and are disposed of by this common judgment. These petitions raise questions regarding wage scales, fitment, housing scheme, house rent allowance, high cost allowance and the effective date of the benefits under the award. There is no dispute as to paying capacity of Sarabhai Chemicals to pay fair wages as may be determined in these proceedings. In para 7 of the impugned award the Tribunal has observed as under:
Sarabhai Chemicals is a well-established and one of the foremost chemical and Pharmaceutical concerns in the country. It occupies a prominent place in the big 20 industrial houses of the Nation. The company, originally a division ot Karum-chand Premchand Private Ltd. was started in 1940 with about 300 employees In 1950 it enicred into collaboration with Squibb. With the technical and manufacturing know-how from Squibb, it got opportunity of development of the Company. It started a planned development and ploughing back of profits, it also entered into more collaborations with well-known foreign firms like Geigy of Switzerland and Merk of Germany. With the help of such foreign collaborators, in a compratively very short span a company which originally started with 300 employees, not only developed into half a dozen units but also achieved gainful diversification. It has now acquired a status of Sarabhai Group of Industries. Thus the original small unit of Sarabhai has now developed into a large establishment which it is today and there are around it a cluster of companies, i.e. Synbiotics Ltd., Sarabhai M. Chemicals; Suhrid Geigy, Sarabhai Common Services, Sarabhai Glass, Sarabhai Machineries (at Ranoli) and a number of such other companies. It is a well-known fact that to-day amongst all the developing industries in India none has a more remarkable record of growth and service than the pharmaceutical industry. In comparison with other big industries the pharmaceutical industry has achieved the maximum profitability with minimum capital investment. As per the report of the Organisation of Pharmaceutical Producers of India (OPPI) there are 2900 Pharmaceutical units in the country out of which 125 are in organised sector, amongst which Sarabhai Group is occupying dominent position. Sarabhai Chemicals have issued their own Publication also which shows their position in the field in India. The publication entitled 'Sarabhai Chemicals Speak the International Language of Health' says:
The history of Sarabhai Chemicals goes back as far as 1943, at which time the company started manufacturing drugs. It started with a modest-introduction of a few products and Chemicals.
However, growth and diversification, the two most striking features of Sarabhai Chemicals, soon led to its emergence as the leading pharmaceutical company in India. Today, it has the highest turnover of over Rs. 400 million more than any other pharmaceutical company in India.
This publication also deals with the exports made by the Company. It says that the company's exports have been as under:
Year Exports in Millions of rupees.1973-74 4.301974-75 7.801975-76 10.601976-77 19.60
The publication further says:
The future holds unlimited potential both to home and abroad. Sarabhai Chemicals based on sound research, backed by some of the most talented and brilliant research scientists, technical personnel and marketing people-promises the World a wealth of medicinal developments.
Thus, Sarabhai Chemicals have, undoubtedly a very bright future and unlimited scope for expansion. Even at the time of adjudication of the last dispute, the company had not denied its paying capacity.
When called upon by the workmen to produce the balance-sheets and profit and loss account, the company had filed a purshis stating that the company did not dispute its capacity to fair wages that may be ultimately determined in the light of the principles laid down by the Supreme Court for fixation of wages. In para 10 of the award, the Tribunal observed that the management had submitted that 'even today this company is the leading paymaster in the region as the wages paid by it are by and large higher than or comparable to the wages paid by other pharmaceutical units in the region'. Further it observed (para 14 of Award) as follows:
It is also important to bear in mind that this company pays about rupees two crores by way of Advance Income-tax which would show that the company is making huge profits. The learned Tribunal, Shri I.G. Thakore, in his earlier award had observed that Cyanamid India Ltd., can be said to be a comparable concern inasmuch as the other pharmaceutical concerns in this State are comparatively small. It has also to be borne in mind that Sarabhai Chemicals, admittedly, is the highest paymaster in the industry as far as the region viz. Baroda, is concerned. Shri Thakore in his Award while deciding the wage-structure had also observed that Sarabhai Chemicals is the leader in the region as far the wage scales are concerned. Considering all the circumstances discussed above, I do not see any reason why Sarabhai Chemicals should not at least be put on par with Cyanamid India Ltd, which, in my opinion, is a comparable concern and is situated in the same State.
3. After considering several Supreme Court Judgments, cited before it, the Tribunal came to the conclusion that the western region including Gujarat and Maharashtra cannot be taken as a region and only Gujarat can be said to be proper region for comparison, and Cyanamid India Ltd. of Bulsar was held to be comparable with Sarabhai Chemicals, and accordingly the Tribunal awarded the wage scales and deamess allowance of Cyanamid with effect from 1st January 1979. The high-cost allowance is discontinued and (ad-hoc amount of Rs. 34/- per month has been awarded. As regards housing construction loan and house rent, the Tribunal has refused both of them.
4. The workmen have challenged that award on the following grounds:
I. The Tribunal has erred in applying the region-cum-industry principle by refusing to consider the western region (inclusive of Bombay, Bulsar, Baroda, as a region and by refusing to compare Bombay pharmaceutical concerns such as Glaxo, Pfizer, Hoechst, etc.
II. Even while taking Gujarat as a region and Cyanamid as a concern comparable to Sarabhai Chemicals, the Tribunal has erred in not awarding the same fully and correctly, and appropriate equivalent pay-scales have not been given and something more ought to have been given. The Tribunal has given no reasons for giving particular pay scales of Cyanamid to particular categories of Sarabhai. It is also contended that the Tribunal has erred on the demand for adjustment and fitment.
III. Ad hoc amount of Rs. 34/- per month which is given to all other workmen is impliedly denied to tempovary/badli workmen for no valid reason and perhaps unintentional and inadvertantly.
IV. House Rent allowance is refused apparently on the erroneous ground that variable dearness allowance linked with consumer price index takes care of house rent.
V. The demand for housing scheme is erroneously rejected on the ground that it is primary responsibility of the State and the employer cannot be compelled to bear such liability.
VI. Even though the demands were raised in 1976 and 1977 and references were made to the Industrial Tribunal in January-February 1978. the Tribunal has erred in giving unduly late effect from 1st January 1979 to the benefits granted under the award.
5. Before going into the merits of the contentions it would be necessary to consider two preliminary objections raised on behalf of the management. The first preliminary objection is that after passing of the impugned award dt. 5th August 1980 the Chemical Mazdoor Sabha had passed a resolution accepting the impugned award and appealing the management also to accept and implement the award and acting upon such acceptance by the workmen, the management had acted to its own detriment by fully implementing the award and by desisting from challenging the same by further proceedings and, therefore, the petitioners are estopped from challenging the award and the High Court should refuse the discretionary relief because the petitioners have failed to disclose material facts.
6. That resolution is at page 407 of the paper book and it is passed by the Executive Committee of the Chemical Mazdoor Sabha, wherein it mentions that the Committee accepts the award and appeals to the workmen to accept the same and requests the management to implement the same at the earliest. It is also mentioned that during discussion on the award there were several suggestions and improvements proposed of which note was taken. It is thus clear that there was no total unequivocal acceptance of the award by the Executive Committee and no acceptance whatsoever by the workmen. There was merely an appeal to the workmen to accept the award and the reservations were there regarding the award and that was also indicated therein. It is also to be noted that there was no such resolution or assurance by the Staff Association, the other Union. The reservations of the Chemical Mazdoor Sabha are also brought out by the application for review made by the Chemical Mazdoor Sabha to the Industrial Tribunal. That application dated 22nd October 1980 is on the record at pages 125 to 128 of Special Civil Application No. 700 of 1981 where Chemical Mazdoor Sabha is the petitioner. A copy of that application was also served to the management at that lime. Therefore, the management could not have taken 'the aforesaid resolution as an unequivocal, full and final acceptance of the award by the Chemical Mazdoor Sabha or by the workmen. In fact there is no evidence that the company had acted on such so-called acceptance. In the letters at pages 410 to 413 wherein the management declared its acceptance of the award and intention to implement the same, there is no reference whatsoever to the so-called assurance of the Chemical Mazdoor Sabha. The company had not made its acceptance conditional or dependent on the acceptance by the Mazdoor Sabha. If the company had really acted on the so-called assurance of the Chemical Mazdoor Sabha, it would have similarly sought similar assurance from the Staff Association before acting on the assurance of Chemical Mazdoor Sabha only. The facts that in the resolution of the Executive Committee itself there were reservations and there was no acceptance by the workmen and further the review application was made to the Tribunal, clearly show that there was no acceptance by the workmen as alleged by the company and the company could not have in good faith acted on such 'acceptance'. The company is a very well managed company having competent managerial and legal assistance. It is too much to believe that such an organisation would act on such loose and indefinite representation and would make payments of millions of rupees, without first making clear in so many terms in writing from both the Unions. In Bennet Coleman & Co. Pvt. Ltd. v. Punya Prasad Das Gupta : (1969)IILLJ554SC , the Supreme Court assuming that the rule of estoppel would apply, held that the representation which is the basis for the rule must he clear and unambiguous and not indefinite and the party relying on it should have in good faith acted on it. In the present case, we do not find that the company had acted on so-called assurance or that it had made due inquiries and acted in good faith. It does not appear to us that but for such so-called assurance the company would not have accepted and implemented the award. It was open to the company to challenge the award in February 1981 when it received the notice of the first petition. However, it has chosen not to do so. That also indicates that the decision of the company not to challenge the award was irrespective and independent of so-called assurance. It is not unlikely that the company implemented the award because it was to its utmost satisfaction.
7. The second preliminary objection is confined to the demand regarding pay scales. In the impugned award, the demand regarding pay scales was adjudicated but the demand regarding classification was left to be decided later on and the Tribunal had hoped that the question regarding the demand of classification would be settled by natural negotiations. The Tribunal had observed as under:
Now as far as classification is concerned, a statement was made at the bar that the parties are negotiating about this question and there was every possibility of a settlement being arrived at. This is evident from the fact that the parties have neither led any evidence nor made any submissions in this behalf. In the circumstances, I do not think that this is required to be decided at present and I hope a happy solution in this behalf might be reached between the parties.
After the award there are three settlements on the demand of classification. The settlement dt. 10th June 1981 relates to Operatives Grades I to V; the second settlement dt. 29th March 1982 relates to other grades except staff and the third settlement of June 1983 relates to staff and clerks. These settlements are at pages 543, 553 and 558 of the paper book. It is significant to note that even though these settlements have been arrived at during the pendency of these petitions, there is no provision made for withdrawal of the petitions or for settling the issues of pay scales involved in the petitions. In fact the settlement largely retains the old classification. The annexure to the settlement shows existing classification, demanded clarification and agreed classification and the last column shows the 'grade applicable as per the award' ('and not grade agreed us applicable'). The very first term of the settlement shows that the parties have agreed to the classification as per Ann. A and it is further stated 'it also shows the awarded grade applicable to the agreed categories of classification.' Term No. 3 also is significant and reads as under:
3. Since the question regarding classification has been settled, the same will not be reopened by either parties before Hon'ble Industrial Tribunal or in the writ petitions that have been filed by the Union's workmen in the Hon'ble High Court of Gujarat.
In term No. 6 there is also a provision for withdrawal of Reference No. 397 of 1980 pending before the Labour Court. It is thus clear that there was no settlement or agreement regarding the appropriate applicable pay scales to the agreed classified grades. It appears that what the company could not obtain by way of agreement is sought to be obtained by this argument. When 'both parties are fully aware of the pending petitions and the questions raised therein, it cannot be appreciated that they could leave out the same from the terms of settlement, if they had actually settled the same. A reference pending in the Labour Court was required to be withdrawn and that is so stated in term No. 6. Regarding the applicable grades it is clearly mentioned that those grades are the grades as per the award (and not as per any settlement). Thus there is no merit in this contention also.
8. It is further argued by the management that the settlements regarding classification have a direct bearing on the demand regarding pay scales and if the pay scales are to be revised that would unsettle all the settlements and the court should be slow to do that. It would have been much better and simpler if both the demands of pay scale and classification were settled/adjudicated simultaneously. However, that does not mean that if they are not disposed of simultaneously, there would be necessarily an illegality or irregularity. At the request of the parties the Tribunal had left that question of classification for settlement and the parties had invited the Tribunal to decide the question of pay scales. While that question of pay scales was pending before the High Court, the parties arrived at settlements regarding classification. They did not settle the question of pay scales. The two demands are distinct and separate; agreement as to classification cannot be extended and projected to unresolved question of pay scales so as to conclude it by implication. The management has pointed out that in para 4 of the settlement there is also a provision to upgrade certain jobs and to promote also certain workmen handling certain jobs to higher categories. However, such upgradation and promotion cannot be connected with the demands of pay scales or even of classification, and so-called upgradation and promotion seems to be a mode of removing stagnation of those who have been contiuning in the same grade for a number of years. Thus, the preliminary objections fail.
1. Region-cum-industry Principle:
9. Now coming to point No. 1 - Region-cum-industry principle, here again there is a preliminary objection by the management that the question of region has been already adjudicated upon between the parties in the earlier award and Bombay is held to be outside the region and, therefore, the same point is barred by the principle of res judicata, and our attention is drawn to the judgment in the case of Burn & Co. v. Their Employees : (1957)ILLJ226SC . In that case the question of pay scale had been directly adjudicated upon by Shri Palit and thereafter the same question was the subject-matter of another reference and the subsequent Adjudicator Shri Banerji held that on principle the decision of a Tribunal on a matter referred to it should not be disturbed unless there had been a change of circumstances since the date of award and as none such existed, the wage structure as fixed by him should stand. The Labour Appellate Tribunal had disagreed with this conclusion. The argument regarding the binding nature of the previous award was dismissed by the Labour Appellate Tribunal with the observations that that was 'a rule of prudence and not of law'. The Supreme Court held that 'if Tribunal meant by this observation that the statute does not enact that an award should not be reopened except on the ground of change of circumstances, that would be quite correct'. The Supreme Court held that the principle of rule of res judicata enacted in Section 11, C.P.C. was in terms inapplicable to industrial adjudication but the principle underlying it is founded on public policy and is of universal application. Here the decision of the Tribunal in the earlier case on the question of region cannot be said to be such a decision which would bind the parties for all time to come, irrespective of change in circumstances. The concept of region may change from time to time and from circumstances to circumstances. In Tata Chemicals Ltd. v. Its Workmen : (1978)IILLJ22SC the Supreme Court held that 'with the march of time, the narrow concept of industry-CM/w-region is fast changing and too much importance cannot be attached to region. The modern trends in industrial law seem to lay greater accent on the similarity of industry rather than on the region'. It should not be lost sight of that in the previous adjudication it had been possible to find a favourably comparable unit within the State and, therefore, the necessity to extend the region may not be that important. All the same, it would be necessary for the Tribunal whenever called upon to decide such question to give due importance to the previous findings and also to the needs of situation in the light of changing circumstances and needs to arrive at a just solution of the problem.
10. In the case of Kuramchand Thapar and Bros. Ltd. v. Their Workmen : (1973)IILLJ115SC the Supreme Court rejected the contention of absolute res judicata in the following words:
We cannot accept the contention of Mr. G.B. Pari that at no time the Bengal Chamber of Commerce Scheme can be adopted, even if circumstances warranted, merely on the ground that on previous of accasions. such n claim made by the workmen has not been accepted.
and the Supreme Court observed that if there was change in circumstances, the Tribunal would be justified in re-examining the question.
11. The workmen have contended that the western region including Maharashtra and Gujarat ought to be treated as a region for the purpose of comparison of different pharmaceutical units and their wage structures. It was contended that Sarabhai Chemicals in Baroda was nearer to Bombay than Tata Chemicals in Mithapur in Gujarat. It was also contended that pharmaceutical units in Maharashtra region account for nearly 60% of the production in pharmaceuticals in India while Gujarat accounts for nearly 25%, drug prices are controlled on All India basis, pharmaceuticals have All India market and State or political boundary has no inherent or rational significance for the purpose of wage adjudication in such industry; in fact Bombay and Baroda were formerly part of a single bilangual State and the division of that State on linguistic principles would not divide the single pharmaceutical region comprising of Gujarat and Maharashtra.
12. The learned Counsel for the Interveners (workmen of Alembic, Baroda), has submitted that the concept of region differs from industry to industry and from time to time and the essence and rationale behind the said principle is comparability of the units and, therefore, depending on the facts and circumstances of the case, the Tribunal would be justified in comparing units of the same industry even outside the State and there is no particular significance attached to administrative or political boundaries and has cited several examples of outside State or multi-State regions having been recognised for wage fixation.
13. In Express Newspapers Pvt. Ltd. v. Union of India : (1961)ILLJ339SC , the Supreme Court extesively quoted from the report of the Committee on Fair Wages wherein the opinion of Bombay Government was also quoted, as under:
Nothing short of a living wage can be a fair wage if under competitive conditions an industry can be shown to be capable of paying a fall living wage'. (The Report farther observed that) 'while the lower limit of fair wage must obviously be the minimum wage, the upper limit is equally set by what may be broadly called the capacity of the industry to pay and between these two limits the actual wages will depend on consideration of several factors including the prevailing rates of wages in the same or similar occupation in the same or neighbouring localities. (Para 56).
The Supreme Court thereafter in para 68 observed that 'it is clear therefore that the capacity of an industry to pay should be gauged on industry-cum-region basis after taking a fair cross-section of that industry. In a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay classwise'. This view is quoted and followed in the case of Shivraj Fine Arts Litho Works v. State Industrial Court : (1978)ILLJ532SC , where the Supreme Court held that there is ample authority in support of the view that the employer can be classified according to his paying capacity.
14. In Express Newspaper's case, the Wage Board had taken the entire country as one region and Newspaper establishments were classified on the basis of gross revenue from all sources of a newspaper establishment. Thus in the first case before the Supreme Court therein the region-cum-industry principle was judicially recognised, whole of India was taken as a region. Gross revenue is again held to be a satisfactory criterion for classification in Management of Cinema Theatres v. Their Workmen 1964(2) L.L.J. 128 (S.C.) and in Press Trust of India v. Union of India : 3SCR499 .
15. The learned Counsel for the Intervener, has referred to several instances where the Wage Boards have taken multi-State regions for the purpose of wage fixation. He drew our attention to Dr. P. Chakravarti's book - Indian Central Wage Boards-Analysis' on page 14, the following observation is made-
The principle of region and delimitation of the regions as carved out by the Boards are not the some but vary from industry to industry. This means for the purpose of fixing regions different factors were taken into account by the Board to suit the specific requirements of the industry, for example, the Wage Boards for Cotton Textile, Cement, and Iron and Steel Industries carved out only two regions each, while Sugar Wage Board recommended four regions based on, several factors such as duration of season, sugar recovery percentage from cane, cost structure of sugar industry in each area, the sugar price position, the prevailing wages in industry and other cognate matters.
16. The learned Counsel also invited our attention to a publication of the Employer's Federation of India 'A Study of Central Wage Board and Reports'. At page 71 of the said book the study points, out that different Wage Boards for different industries have differed sharply on the scheme of the regional classification. It is pointed out that Cotton Textile Board divided the industry into two categories; Sugar Board classified the industry into four zones; Jute Mills were divided into West Bengal and the rest; Coffee Plantation Board took each State as a region. Rubber Plantation Board treated Kerala and Madras as one region and Mysore as another for wage differentiation. The Tea Plantation Board prescribed regional differentials at the State level for field workers and it brought regional level (namely, the North-east India, North India and South India) for clerical and other staff. Cement Board differentiated wages by prescribing two separate Wage rates - one for Gujarat and Saurashtra region and another for factories in centres outside Gujarat and Saurashtra. It is also observed that in adopting the regional classification most of the Boards usually relied on tradition and usage. The learned Counsel for the Interveners, therefore, argues that there is no particular significance attached to State boundary and the only rationale behind the region-cum-industry principle for wage adjudication is that it is expedient that all comparable units in the same industry in the same region ought to have equal production costs, and equal competitive footing and the workmen should get equal wages in the same industry in the same region so as to be conductive to industrial peace, and it is not necessary to take every narrow view of the concept of region especially in the context of pharmaceutical industry which is not a regional industry, but is a national industry and it has even large multi-national element. For such an industry a broad view of region ought to be taken and the rational principle of comparing with the comparable units should be applied.
17. On behalf of the management it was contended that disputes before Wage Boards and before the Industrial Tribunals are of entirely different nature. Before the Wage Board, entire picture of the country would be represented and the Wage Board will have a comprehensive picture of the entire industry in the country before it and, therefore, it might be in a position to deal with different regions in the country and to carve out a region with similar economic conditions extending over one or more States. But when an Industrial Tribunal functioning in a State is dealing with an individual unit it cannot take inter-State regions for the purpose of wage adjudication. In this connection reliance was placed on a judgment of the Supreme Court in the case of Workmen of Bajrang Jute Mills Ltd. v. Employees of Shri Bajrang Jute Mills : (1970)IILLJ6SC , and the following observations are relied on:
The approach of the Wage Board to determine uniform wage scales for the entire industry must suffer from an inherent weakness. Conditions, such as easy access to Law materials, transport, nearness of markets for disposal of the manufactured product, availability of labour, the type of market whether within or outside the country for which the manufactured articles are intended and diverse other factors must vary from region to region. Likewise, economic conditions affecting the consumer prices must and do differ, as is well-known, from region to region, depending largely upon whether a particular region is self-sufficient or not in the elemental needs of its citizens and these in turn are bound to affect living standards. It would, therefore, be too artificial and unrealistic an approach to be oblivious of these differences and to attempt to group together all establishments and factories and devise common wage-scales applicable to all of them disregarding the peculiar features of the industry or in a particular region. Favourable conditions prevailing in one region would place industrial concerns there in a position better than those in other regions where such conditions do not occur. Similarly, in regions where consumer prices are lower, labour would be better off than in the rest of the regions where the living index is higher, yet, the wage scales would be the same in all the regions. Uniformity of wage scales, irrespective of differences in conditions would place both the employees and the employers in regions where such favourable conditions prevail in an unfairly advantageous position over the employees and employers in the other regions. Instead of attaining harmony there would as a result arise inevitably a feeling of discrimination.
18. In that case the Wage Board had equated the Cotton Textile Industry in West Bengal with the Jute industry there and raised the pay-scales in the Jute industry so as to bring them to the level of Cotton industry. Having so done, the Wage Board next also raised the wage scales in the mills outside West Bengal to bring them in line with the scales proposed by it for the mills in West Bengal. As a result the Cotton industry in West Bengal came to be compared with Jute industry outside West Bengal, where conditions in different regions situated outside were obviously different and hence the Supreme Court held that the principle of industry-cum-region was violated. The Supreme Court noticed the difference in approach between the Wage Board and Industrial Tribunal in the following terms:
Such a disharmony in the approach to the problems of determination of wage scales by a Wage Board on the one hand and an Industrial Tribunal on the other must inevitably occur because whereas the attempt of a Board would be to uniformise wage scales for the entire industry, though it is spread over different parts of the country where conditions can rarely be expected to be similar or the same, the concern of a Tribunal would principally be to determine equitably the wage scales of a single unit with which it is for the time being concerned. The difficulty would be all the more felt by such a Tribunal where it is faced with the dilemma whether or not it should follow the Board's recommendations arrived at on principles different from (as in the present case) those consistently followed in industrial adjudication. One should have thought that this difficulty would have been realised before the recommendations of the Wage Board were accepted by Government.
Then the Supreme Court proceeded to indicate as to how such difficulty could be obviated by considering different conditions prevailing in various areas and by determining wage scales - regionwise 'where conditions differ often radically from region to region and even the index of living differs within a fairly wide range'.
19. The observations in Shri Bajrang Jute Mills case (supra) were explained in the subsequent case of Management of Kirlampudi Sugar Mills Ltd. v. Industrial Tribunal Andhra Pradesh and Anr. : (1971)IILLJ491SC , wherein the Wage Board had divided the country in four regions in the following words:
There is nothing in the Bajrang Jute Mills case which makes it obligatory on a Wage Board to divide the industry into regions as well as classes or to examine the financial capacity of every unit in that industry in the region, irrespective of the conditions prevailing in the different regions of that industry. As long as all relevant factors appertaining to that industry, industry-wise and region-wise have been considered and the capacity of a fair cross-section of that industry to pay in that region has been ascertained, the recommendations of the Wage Board cannot be held to be invalid. It is not in every case that a division into classes in the same region, on a unit-wise capacity should be made before recommendations of the Wage structure, dearness, allowance or other conditions of service in that industry could be held to be fair and within the financial capacity of the industry in that region.
The Supreme Court further observed as under:
It would, therefore, appear that the Wage Board following the principles laid down by this Court has considered the capacity of the industry region-wise and has also fixed wages different from region to region having regard to the difference in the capacity of the industry region-wise. Further it has given good reason for not furnishing a criteria for further classification of the industry within the region. In these circumstances prescribing the same wage for all units of industry in the same region is in our view justified and the fact that the industry in the region has not been divided into classes cannot vitiate the recommendation of the Wage Board.
20. In Chandan Metal Pvt. Ltd. v. Engineering Kamdar Union 17 G.L.R. 849 : 1977(3) L.L.J. 27, the Division Bench of this Court had considered the regional classification of Engineering industry. The Engineering Wage Board had divided the industry in 5 regions, Bombay and surrounding industrial areas were included in one region, Calcutta and surrounding industrial areas were in another region, Madras, Poona and Ahmedabad industrial areas were grouped in third region, Baroda was grouped with Coimbatore, Nagpur, Bhopal, Kanpur and Faridabad industrial areas and the rest of the country was treated one separate region. The Division Bench through Mr. Justice D.A. Desai (as he then was in this High Court), did not find anything wrong with such classification and observed as follows:.it clearly appears from an exhaustive examination of the report of the Wage Board that it kept before its eye all the relevant principles and especially the principle of region-cum-industry and formulated its recommendations. In fact at the cost of repetition we may say that the question of regional division of the country and of dividing the units in each region into four groups size wise, the Chairman and independent members have more or less accepted the suggestion of the representatives of the Industry wholly incidentally overlooking or ignoring or rejecting the view expressed by the representatives of the employees. In this background we find it a little exciting that the petitioner should make a grievance both about the regionwise distribution and classification into groups of units in each region.
21. In the case of Khedut Sahkari Khand Udyog Mand Ltd. v. Workmen 20 G.L.R. 858, the Division Bench of this Court had upheld the Industrial Award of deamess allowance on U.P. pattern to the sugar factories in Gujarat on the ground that various sugar factories in southern region (Maharashtra, Karnatak, Tamil Nadu) and in neighbouring sugar factory at Kodinar had accepted the U.P. pattern. This view was not disturbed by the Supreme Court in : (1979)IILLJ383SC .
22. In the case of Workmen of Orient Paper Mills v. Orient Paper Mills : (1969)IILLJ398SC , a comparison was not only made with paper mill outside the State but also to as dissimilar an industry as Colliery within the State.
23. On behalf of the management, it was contended that region would mean the region where the unit is located, namely, Baroda City or Baroda District. This is too narrow an application of the concept of region to make it almost redundant. Moreover, in view of the fact that as early as 1971 and thereafter Sarabhai Chemicals has been held to be comparable to Cyanamid of Bulsar, such narrow construction cannot be accepted. Even in 1974 the management had conceded and contended that Gujarat is a region (vide Gazette page 67).
24. The management has also relied on the judgment of the Supreme Court in Tata Chemicals Ltd. A.I.R. 1978 S.C. 828, in support of its contention that region cannot extend beyond the state boundaries. The workmen have also relied on the same judgment in order to emphasise the modern trend in industrial law. The relevant observations read as under:
Re. question No. 5: This takes us to the determination of the last question. The decision of this Court in Bengal Chemical and Pharmaceutical Works v. Workmen and Anr. 1969(1) L.L.J. 751 at 758. no doubt shows that in fixing wages and deamess allowance, the Industry-cum-Region formula is inter alia to be kept in view. At the same time, it has to be borne in mind that there can be no comparison between a small struggling concern and a large flourishing unit. It follows, therefore, that when there is a large disparity between the two concerns engaged in the same line of business in a region with which the industrial court is dealing it is not safe to fix the same wage structure for the large flourishing concern of long standing as obtains in a small struggling concern. See French Motor Car Co. Ltd. v. Their Workmen : (1962)IILLJ744SC . It cannot also he lost sight of that with the march of time, the narrow concept of Industry-cum-Region is fast changing and too much importance cannot be attached to region. The Modern trends in industrial laws seem to lay greater accent on the similarity of industry rather than on the region. It was observed by this Court in Workmen of New Eqerton Woollen Mills v. New Eqerton Woollen Mills and Ors. 1969(2) L.L.J. 782 that where there are no comparable concerns in the same industry in the region, the Tribunal can look to concerns in other industries in the region for comparison but in that case such concerns should be as similar as possible and not disproportionately large or absolutely dissimilar. On the parity of reasoning, it is reasonable to conclude that where there are no comparable concerns engaged in similar industry in the region, it is permissible for the Industrial Tribunal or court to look to such similar industry or industries as nearly similar as possible in adjoining or other region in the State having similar economic conditions.
The Supreme Court also observed that there was no other heavy chemical concern in the region which can be 'favourably compared' to the appellant company and, therefore, the Tribunal was held not to be in error in comparing Sarabhai Chemicals, Baroda with Tata Chemicals in Mithapur. The Industrial Tribunal relying on this judgment observed that 'this categorically restricts the comparison with similar industry situate within the State', while in the instant case, companies like Glaxo, Boots, Roche, etc. are situated in the State of Bombay in different State where the economic conditions are different from those obtaining in Baroda in Guiarat State. On behalf of the workmen, this conclusion of the Tribunal is attacked on the ground that the Tribunal has erred in construing the words in the judgment as words in a statute. In that case the Supreme Court was not called upon to decide the question of comparison with any unit outside the State and, therefore, the Supreme Court had no occasion to consider the question of region extending beyond the State or comparing units outside the State. In that case comparison was with units within the State and, therefore, the observation that 'it is permissible for the Industrial Tribunal to look to such similar industry or industries as nearly similar as possible in adjoining or other region in the State having similar economic conditions' cannot be construed so as to mean that it is not permissible for the Tribunal to look outside the State and compare with industries in region outside the State having similar economic conditions. The Tribunal was, therefore, not justified in construing the Supreme Court judgment and observations as laying down a proposition of law that the region for industry-cum-region principle for wage fixation would be only within the State.
25. In earlier cases also the Supreme Court has time and again observed that the region-cum-industry principle is not inflexible, invariable and static. In the case of French Motor Car Co. v. Their Workmen : (1962)IILLJ744SC , the Supreme Court has observed as follows in para 4:
At the same time, it appears that the appellant-company is practically paying the highest wage-scales in the particular line of business in which it is engaged and it is urged on its behalf that if it is compared with concerns in its own line of business, there would be no justification for increasing the wage-scales for it is already paying the highest scales in that line of business. We are of opinion that this argument cannot be accepted, for it would then mean that if a concern is paying the highest wages in a particular line of business, there can be no increase in wages in that concern whatever may be the economic conditions prevailing at the time of dispute. It seems to us, therefore, that where a concern is paying the highest wages in a particular line of business, there should be greater emphasis on the region part of the industry-cum-region principle, though it would be the duty of the Industrial Court to see that for purposes of comparison such other industries in the region are taken into account as are as nearly similar to the concern before it as possible.
26. In another case of Greaves Cotton & Co. Lid. v. Workmen : (1964)ILLJ342SC , the Supreme Court referred to the cases of Hindustan Motors 1969 (2) L.J. 392 and French Motor Car Co. : (1962)IILLJ744SC and held that there is no inconsistency in the two cases and there is flexibility of emphasis in the given facts and circumstances. The Supreme Court observed as follows:
The principle, therefore, which emerges from these two decisions is that in applying the industry-cum-region formula for fixing wage-scales the tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry; in such a case in order that production cost may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind. But where the number of industries of the same kind in a particular region is small it is the region part of the industry-cum-region formula which assumes importance particularly in the case of clerical and subordinate staff, for as pointed out in the French Motor Car Co.'s case there is not much difference in the work of this class of employees in different industries.
27. In Tata Chemicals case (supra) also the Supreme Court has made it clear while referring to the judgment in French Motor Car Co. case, that too much importance cannot be attached to region and the emphasis should be on similarity of the economic conditions of the two units.
28. As regards the considerations for comparability of the units, in the case of Williamsons (India) Pvt. Ltd. v. Its Workmen 1962(1) L.L.J. 302 the Supreme Court has laid down some guidelines in the following words:
This Court has repeatedly observed that in considering the question about comparable concerns, Tribunals should bear in mind all the relevant facts in relation to the problem. The extent of the business carried by the concerns, the capital invested by them, the profits made by them, the nature of the business carried on by them their standing, the strength of their labour force, the presence or absence and the extent of reserves, the dividends declared by them and the prospects about the future of their business - these and all other relevant facts have to be borne in mind.
In Kamani Metals & Alloys Ltd. v. Their Workmen : (1967)IILLJ55SC also the Supreme Court has further ellucidated the application of the principle of region-cum-industry and comparability of units in the following words:
The next part of the inquiry involved the application of the principle of industry-cum-region. This principle is that fixation or revision of scales of wages, pays or dearness allowance must not be out of tune with the wages etc. prevalent in the industry or the region. This is always desirable so that unfair competition may not result between an establishment and another and diversity in wages in the region may not lead to industrial unrest. In attempting to compare one unit with another care must be taken that units differently placed or circumstanced are not considered as guides, without making adequate allowance for the differences. The same is true when the regional level of wages are considered and compared. In general words, comparable units may be compared but not units which are dissimilar. While disparity in wages in industrial concerns similarly placed leads to discontent, attempting to level up wages without making sufficient allowances for differences, leads to hardship.
29. Similar view is also taken in the cases of Unichem Laboratories Ltd. v. Their Workmen : (1972)ILLJ576SC , and Woolcombers of India Ltd. v. Woolcombers Workers Union : (1974)ILLJ138SC .
30. From the aforesaid discussion and judgments of the Supreme Court, it is clear that:
(i) Region-cum-industry principle is not a static and invariable rule and its rationale is that it is expedient that ordinarily all comparable units in the same industry in the same region ought to have equal production cost and equal competitive footing;
(ii) But the concept of region is a broad concept and not necessarily confined to State and it may differ from industry to industry and from time to time;
(iii) Similarity of economic conditions would be a guiding factor to determine the region. Some of such conditions are consumer price index, concentration and development of the concerned industry in the geographical area, access to raw material, transport, nearness of market, availability of labour and type of market;
(iv) Since it is impossible to have two identical regions or units, it would be necessary not only to find out similarities but also to find out dissimilarities and differences and to make suitable adjustments or allowances for the same. Here also rigidity and golden scale need not be applied.
(v) If there are large number of comparable units in the same industry in that region, it would be proper to compare with comparable units in the same region.
(vi) Otherwise it would be proper for the Tribunal to look for comparable units in the same industry in other or adjoining region irrespective of the State boundaries or to look to similar other industry in other line of business in the same region or other adjoining region; and
(vii) While comparing two units (whether in the same region or in the same industry or not) the Tribunal ought to take care to see that the two units are comparable having regard to the guidelines indicated in the Williamson's case by the Supreme Court, such extent and nature of business, capital invested, profits, expenses, dividends, standing labour strength, future prospects etc.
(viii) It is permissible to divide the industry or employers and classify them according to their paying capacity or gross revenue.
31. In the facts of the present case, the Tribunal has given three reasons for not treating western region including Bombay as one region. One is that it is outside the State. That reason is not correct one as held earlier. The second reason given by the Tribunal is that in the earlier award Shri I.G. Thakore has held that Bombay is not within the region. That by itself may not be a valid ground because with the change in the circumstances, it may become necessary to change the view. Thirdly, the Tribunal has also held that the economic conditions are different from those obtaining in Baroda from those in Bombay. The Tribunal has also observed that in this connection it also agrees with the observations made by Shri I.G. Thakore in his earlier award. In the earlier award Shri I.G. Thakore relied on the still earlier award in the case of Cyanamid rendered in Reference (IT) 126 of 1964 wherein he held that Bulsar and Bombay cannot be said to be within one region; the cost of living at Bulsar and Bombay would be different and they were in different food zones and several demands which an urban life make in Bombay could not exist in a small town at Bulsar. Thus from 1964 the workmen in pharmaceutical industry in Gujarat (Cyanamid and Sarabhai) are striving to compare their units with their counter-parts in Bombay and the same has been denied to them. Fortunately for them, gradual upward wage revision has been possible by comparison within the State. In Reference (IT) 126 of 1964 of Cyanamid, while comparing Cyanamid and Sarabhai, the Tribunal observed as under:
This may be considered to some extent a comparable concern. However, the difficulty has been that the wages and deamess allowance in the case of this concern have been fixed by me with reference to what is being paid in Sarabhai Chemicals, if I were to fix the wages of Sarabhai Chemicals again with reference to what is being paid in Cyanamid India Ltd., we would only be moving in a vicious circle. Again, I learn that a demand for revision of wages of this concern has already been made and they are also likely to be revised. There are no other large pharmaceutical concerns in Gujarat with which Sarabhai Chemicals could be compared.
It would not be correct to describe such successive wage revisions as moving in a vicious circle. Such comparison is necessary and legitimate exercise. But a time may come when equality is reached in the wage structures of these two units and/or when a question of wage revision in both these units comes before a Tribunal at the same time and that Tribunal may not have any other comparable pharmaceutical unit in Gujarat and the Tribunal may have to widen the concept of region. However, fortunately this time it is not necessary to go that far. In the present case, the Tribunal has held Cyanamid to be a comparable pharmaceutical unit in the same region and as observed by the Supreme Court in Tata Chemical's case (supra) Cyanamid is a unit which can be 'favourably compared' with Sarabhai for the present. The wage revision consequent upon this comparison would give a reasonable and gradual (not rapid) rise to the workmen of Sarabhai. Thus, there is a favourably comparable unit in the same industry in the same region Gujarat and, therefore, the Tribunal is justified in excluding Bombay pharmaceutical units from comparison and consideration for the present. There is also paucity of material and evidence for comparison and finding out similarities and differences and also there is absence of evidence for making allowances or adjustments for the differences. However, in future in the facts and circumstances then available, the Tribunal may have to reconsider the same. It may also have to ask the parties to give evidence about the comparability as well as about the differences in their economic conditions and other relevant factors and also to make adjustments and allowances for such differences.
32. So far as these petitions are concerned, we confirm the finding of the Tribunal that Cyanamid is a comparable concern and that there is no reason why Sarabhai Chemicals should not at least be put on par with Cyanamid India Limited.
33. While excluding Bombay pharmaceutical units from comparison, it would not be just and equitable to totally keep them out of consideration. There is some force in the grievance of the workmen that pharmaceutical industry is not a regional but national and has large multi-national element and in otherwise comparable pharmaceutical concerns the profits are also comparable, and whereas the managements of those pharmaceutical comparable units in Bombay pay higher wages there is no reason why the pharmaceutical companies in this region should profit more by paying less wages to its workmen, that would be undue advantage to the management. Both labour and capital, the workers and the management, are legitimate sharers in the prosperity and profits of the undertaking. When the labour is given a lesser share in its profit and prosperity, the management gets correspondingly larger share. Therefore, the adjudicating authority would be justified in bearing this relevant fact in mind while adjudicating upon the various demands.
II. Equivalent Pay-scales of Cyanamid
34. The workmen have contended that the Tribunal has not awarded correct and equivalent wage scales of Cyanamid to the different categories of Sarabhai Chemicals. After holding that the workers of Sarabhai should at least be put on par with Cyanamid, the Tribunal in para 16 of the impugned award revised the pay scales by awarding various pay scales of Cyanamid to various categories of Sarabhai. However, the Tribunal has not given reasons for holding such grades as equivalent grades for the purpose. The workmen have raised, inter alia following contentions in this regard:
(i) The clerks and subordinate staff in Sarabhai ought to have been equated with such staff and branches and depots of Sarabhai and its sister concerns in other cities on the principle of All India uniformity: Clerical and subordinate staff is entitled to have their wages fixed on the principle of uniformity in all industries since their work in any industry is similar;
(ii) Junior clerks in Sarabhai ought to have been given the pay scale of intermediate clerks in Cyanamid and not that of a junior clerk in Cyanamid having regard to the findings in the earlier award that junior clerks in Cyanamid are comparable to peons in Sarabhai Chemicals. The following observation of the Tribunal in the earlier award is relied upon:
In Cyanamid there are 3 categories of clerks, viz. Junior, Intermediate and Senior. There are only 3 junior clerks in the grade of Rs. 130/- and their nature of work is filing, record keeping, mailing etc. which are mainly done by peons in Sarabhai Chemicals.
It is further contended that senior clerks in Sarabhai (including Junior Stenographers) should have been given the pay scale of senior clerks in Cyanamid;
(iii) Chemists in Sarabhai ought to have been given the pay scale of at least Junior Chemist (if not Senior Chemist) in Cyanamid and not that of Operators (Science Graduates) of Cyanamid. It was also pointed out that Sarabhai Chemist category (scale 150-600) was shown in ex. 5(12) to be equivalent to Cyanamid Junior Chemist (scale 250-730) and such equivalence was not disputed by the management before the Tribunal.
(iv) Supervisors and Senior Stenographers should have been given higher grades than what they have been awarded i.e. higher than the Operators Grade II and Stenographers respectively.
(v) Operators Grade I to V-in Sarabhai (i.e. unskilled, semi-skilled A,B and Technician Grade III and II) are awarded Grades I to V of Cyanamid arbitrarily and without assigning any reason and without any comparison and they ought to have been given Cyanamid Grades II to VII.
35. There is considerable force in the contention that the Tribunal has not given reasons and has not attempted equivalence. We are satisfied that this is a just grievance. The Tribunal has given no reasons in support of its conclusion regarding the actual revision of basic wages. Absence of reasons in support of the conclusion is indeed a serious flaw in the award (see Woolcombers of India Ltd. v. Woolcombers Workers Union A.I.R. 1973 S.C. 2778. The Tribunal ought to have taken into consideration and dealt with the rival contentions and given its reasons. There is no alternative but to set aside the findings and conclusion recorded in para 16 of the impugned award and to call for its fresh findings. Shri K.S. Nanavati the learned Counsel for the management has stated that the management had no objection to the Tribunal re-examining the equivalence of the grades and categories of Sarabhai & Cyanamid by job comparison. But in the meanwhile it would be necessary and in the interest of justice to direct that impugned directions shall continue to be operative till further orders as an interim arrangement in view of the fact that there is very little likelihood of the wages being refixed at any lower stage.
III. Ad-hoc amount of Rs. 34/- p.m.
36. The Tribunal has while awarding pay scales of Cyanamid also awarded an ad-hoc payment of Rs. 34/- per month in the following words:
It may be noted at this stage that as far as Cyanamid India Ltd. is concerned, besides granting the revised pay-scales an ad-hoc payment of Rs. 34/- to all permanent workmen effective from 1st September 1978 was also given. However, it is also to be noted that the said ad-hoc amount will not attract Provident Fund, Bonus, Over-time, leave encashment or any other like payment. Absence or leave on loss of pay will not qualify for the proportionate ad hoc payment. As I have treated Cyanamid India Ltd. as a comparable concern with Sarabhai Chemicals, this ad-hoc payment of Rs. 34/- is also to be granted on the same terms and conditions as mentioned above. I direct accordingly. However, so far as the retrospective effect in this behalf is concerned, I shall deal with the question hereafter under the heading retrospective effect.
It appears that since this ad-hoc payment of Rs. 34/- in Cyanamid is made to permanent workmen only, the direction of the Tribunal is construed so as to mean that in Sarabhai also this amount of ad-hoc payment of Rs. 34/- per month would be payable to permanent workmen only and not to temporary or Badli workmen. This does not seem to be the intention or the language of the Tribunal. While dealing with the demand regarding high cost allowance which was being paid to all workmen in Sarabhai including the temporary and badli under the previous award, the Tribunal has discontinued the same and has observed as follows:
Now, when Rs. 34/- per month by way of ad-hoc amount over and above the new pay scales and the new dearness allowance is granted to the workmen of Sarabhai the resultant amount which the workmen would receive by way of his total pay packet is certainly going to be more than what was received by the workmen in the textile industry, even if high cost allowance which they are receiving at present is included.
37. It is thus clear that discontinuance of the high cost allowance was the consideration for granting Rs. 34/- per month by way of ad-hoc amount. Since the high cost allowance was being paid to all the workmen of Sarabhai Chemicals and the Tribunal has also observed that Rs. 34/- per month by way of ad-hoc amount is granted to the workmen of Sarabhai, the Tribunal has included all workmen including temporary and badli, for grant of this ad-hoc amount of Rs. 34/- per month. The same consideration is uniformly taken into account while giving retrospective effect. The revised wage scales and dearness allowance are applicable to all the workmen and the Tribunal has further observed 'in addition to the wages as per revised pay scales these workmen arc also given Rs. 34/- per month as stated above. For the same reasons as stated above, this ad-hoc payment of Rs. 34/- should also be made to the workmen with effect from the same day, namely, 1st January 1979'. Here also the reference is to all workmen without any distinction. Therefore, there is no justification whatsoever for construing the grant of this ad-hoc payment of Rs. 34/- per month only to permanent workmen and to deny the same to temporary and badli workmen. In the earlier award Part II published in Gazette dated April 18, 1974, the demand for making temporary and badli workmen permanent, the Tribunal has observed as follows:
I do not think there is any difference in the wages of permanent, temporary and badli workmen so far as this company is concerned. The minimum of the different scales would equally apply to the different persons in these categories irrespective of the fact whether they are temporary, badli or permanent. The company has pointed out that badli or temporary workmen are also given annual increments on their completing 240 days in a year. That they get earned leave under the Factories Act. They are also given uniforms after they put in 240 days. In the circumstances no further direction appears to me to be necessary, therefore, said demand should be rejected.
In view of this coupled with the fact that high cost allowance which was being paid to all workmen has been discontinued this ad-hoc payment of Rs. 34/-per month should be granted to all the workmen including temporary and badli.
38. It is argued on behalf of the management that this amount of Rs. 34/- is being paid in Cyanamid to their permanent workmen only and, therefore, when Cyanamid pay scales and wage structure is being applied to Sarabhai it should be made applicable only in the manner and to the extent to which it is applicable to Cyanamid workers. It is true that in Cyanamid it is payable only to permanent workmen. But it has to be borne in mind that the Tribunal has discontinued the high cost allowance in Sarabhai payable to all and while doing so, it has taken into account this ad-hoc payment and the Tribunal has clearly indicated that the ad-hoc payment was being awarded to all workmen without excluding temporary and badli workers. Moreover, it is not necessary that all conditions and every detail of Cyanamid has to be followed with an exactitude when the Tribunal has found that Sarabhai Chemicals should be at least put on par with Cyanamid. There is sufficient cause here to go a little higher than at par with Cyanamid. Moreover in Sarabhai Chemicals, the temporary or badli status does not ordinarily operate for more than a year and, therefore, this liability is not likely to make significant financial burden. It is, therefore, clarified and modified that the ad-hoc amount of Rs. 34/- per month will be payable to all the workmen including temporary and badli with effect from the date from which all the workmen get this benefit.
IV. House Rent Allowance
39. The Tribunal has observed that in the previous award of 1974 the demand for house rent allowance was rejected and the Tribunal has further pointed out that the element of house rent is already included in the wages and variable D.A. linked with index and, therefore, also this demand should not be granted. The management has also drawn our attention to the gazetted index showing that the consumer price index includes an element of house rent and, therefore, the Tribunal was justified in refusing the house rent. In the earlier award also it was mentioned that Textile industry of Ahmedabad does not pay house rent.
40. The workmen have drawn our attention to the Full Bench Award of the Industrial Court dt. 28th November 1981 in the matter between Textile Labour Association, Ahmedahad and Ahmedabad Mill-owners' Association. After considering that house rents have gone so high that they are beyond the reach of the workers and the cumulative effect of all prevailing circumstances was found to be that house rents have shot up tremendously. Then the Full Bench of the Industrial Court has observed as follows for awarding house rent allowance:
Though it is true that the textile workers are getting dearness allowance and variable dearnerss allowance etc. based on the consumer prices index numbers published every month which includes an element of house rent, it appears that the same is based on 1960 series which does not reflect the correct picture of the prevailing house rents. Further with the growth of the working population, only a negligible percentage of the workers would not be staying in the premises where old rates of house rents are prevalent. Naturally, with the development and growth in the industry thousands of new entrants have to find a place of residence for themselves in the city of Ahmedabad or in the round about places and for them it has become extremely difficult to get even one room for an amount of less than Rs. 100/- per month. In the index numbers the house rent which is being reflected is based on old house and old house rents. Even the Survey Committees set up in this behalf have found as appears from their reports, that the method adopted in arriving at the house rent figures is quite outdated and needs several changes. It appears to be the clear view of the committees that the present index does not reflect the correct picture as the house rent is concerned. We have considered this as fact of matter and in our view there is considerable force in the arguments advanced on behalf of the TLA. The index numbers do not reflect the house rent properly and it also has not considered the change in the standard of living; and either the scheme of compilation of the index numbers should be revised or something by way of house rent allowance should be granted to the workers. As far as correction in the scheme is concerned it is not within our jurisdiction and therefore the second option only remains to be considered by us.
41. It is thus clear that the index numbers do not reflect the house rent properly and the demand for house rent could not have been rejected on that ground. But that does not mean that the workmen should be granted H.R.A. in this proceeding. The ad-hoc amount of Rs. 34/- in Cyanamid is linked with the demand of H.R.A. in Cyanamid. Their settlement of 1978 (clause 20) provides that the demand for house rent was not pressed and in future whenever the house rent demand is granted, this ad-hoc amount should be adjusted. Since Cyanamid is taken as the basis, and in Cyanamid, H.R.A. is not granted in 1978 settlement and is linked with ad-hoc amount, this demand for H.R.A. cannot be granted at this stage. We are informed that fresh demand for H.R.A is already raised again and that in Cyanamid also there is subsequent settlement granting H.R.A. The Tribunal may consider that demand in the new Reference in the light of the circumstances then available. For the present we confirm the finding regarding refusal of house rent allowance, of course, for different reason.
V. Honsing Scheme
42. As regards housing scheme, the earlier award, after referring to the report of the Planning Commission, observed as follows:
Whilst in the present state of our national economy and the general financial conditions of the industry it may be undesirable to introduce an obligation of housing on the employers, I do not think that the demand should be necessarily rejected in every case when an employer is in a position to contribute at least in some small measure towards its solutions. The National Commission on Labour in its Report published in 1969 has examined the subject of housing. It has observed that the problem is of such a vast dimension that no single agency can reasonably expect to solve it. It has called upon the Government to shoulder the major responsibility, but it does not, in my opinion, absolve all employers from sharing even to a small extent the responsibility. The company has been helping to a small extent the employees to build their own houses by taking advantage of co-operative housing schemes or industrial subsidised housing scheme. It has also given some loans to workmen under subsidised housing schemes and it is also arranging loans from the banks by standing as a security to the banks. However, it appears to me that looking to the large number of persons employed by this concern, the needs of the workers and its resources what is done is not adequate and, in any event, the company should be called upon to play a much bigger role than what it has done. It may be that such an obligation is not cast on the textile industry but that does not mean that no additional burden can be cast on this company. The Alembic Chemical Works Co. Ltd., another pharmaceutical company in this region, has provided houses to a large number of its employees. In an adjudication of this kind, however it is not possible to give specific directions as to how it can exactly be done. There are large number of schemes of the Government of Gujarat and of the Government of India and money is available from the LIC. banks and co-operative societies and different people could be helped in different ways. What is required is that help should be taken from all available sources and that an honest effort made to provide housing to as many persons as possible gradually.
I, therefore, direct as follows: That the company shall set aside an amount equal to Rs. 8/- per month per worker and Rs. 10/- per month per member of the staff every year i.e. for the years 1974,1975 and 1976, that this amount should be utilised for the purpose of meeting the housing needs of such number of its workers as is possible with the assistance of all other available resources, loans, subsidies, etc. from State and Central Government, the details of the scheme to be worked out in consultation with the union or unions having a substantial number of members. Unutilized amount should earn an interest of 8 per cent. The present direction shall only be binding till 1976 and no further.
43. Thus a very healthy and salutary beginning was made by the earlier award. However, surprisingly the same has been discontinued and rejected under the impugned award. For rejecting the demand the Tribunal has relied on the Supreme Court judgment in the case of Patna Electric Supply Co. v. Patna Electricity Worker's Union : (1959)IILLJ366SC . In that case the Supreme Court has observed that housing accommodation of industrial labour is the primary responsibility of the State and in the present economic conditions of our industries, it would be inexpedient to impose on the employer the obligation to provide housing accommodation for their employees. The same view was followed by the Supreme Court in Mohmad & Sons v. Workmen 1968(1) L.U. 536. Patna Electric Supply case was decided by the Bench consisting of Sinha, Gajendragadkar and Wanchhoo, JJ. In the subsequent case of United Salt Works v. Their Workmen 1962(1) LLJ 131, the Bench consisting of Gajendragadkar and Wanchhoo, JJ. observed and clarified as follows:
The problem of housing and the employer's liability in that behalf have been considered by this Court in Patna Electric Supply Co. Ltd. v. Patna Electric Supply Worker's Union 1959(2) L.L.J. 366 : (1959)IILLJ366SC . In that case this Court has observed that it would not be expedient in the present financial condition of the industries in the country to impose additional costly burden of providing housing facilities, for, providing housing facilities should normally be the responsibility of the State. These observations, no doubt, are not intended to lay down an invariable or inflexible rule. Exceptions can and should be made where circumstances justify the departure from the said observations.
It is thus clear that the observations in Patna Electric Supply case were not invariable and inflexible rule and the Supreme Court itself has made it clear that exceptions should be made where circumstances justify the departure.
44. In the case of Management of Toklai Experimental Station v. The Workmen A.I.R. 1962 S.C. 1340 the Supreme Court observed that 'a demand for the provision of housing accommodation can be reasonably entertained where it appears that the financial position of the employer can bear the burden involved in the said demand', and having regard to the financial position of the Station in that case, the demand for housing accommodation was rejected.
45. In the present case there is no difficulty as to the financial position. Moreover, there was already an existing housing loan scheme under the earlier award which had been accepted by the management. This is a fit case where an exception could have been and should have been made and the Tribunal has committed an error apparent on the face of record in discontinuing the existing scheme and not continuing and improving the same further and in rejecting the demand. It was pointed out at the hearing that out of the sum of about Rs. 10 Lacs which had accumulated under the earlier scheme, a sum of about Rs. 8 lacs lias been disbursed amongst the workmen to assist them in their housing needs. It is, therefore, clear that a housing scheme deserves to be made and the demand deserves to be granted to a substantial extent. However, details and extent of granting the demand will have to be worked out before the Tribunal. We quash and set aside the award of the Tribunal so far as it has rejected the demand in para 22 of the impugned award.
VI. Retrospective Effect
46 The Tribunal has granted the demands with effect from 1st January 1979 so far as pay scales, dearness allowance and ad-hoc amounts are concerned The earlier award on the demands of 1971 was made in 1974 It was terminated on 21st February 1976 and these demands were raised on 5th September 1976 by the Staff Association and on 27th May 1977 by the Chemicals Mazdoor Sabha and the demands came to be referred between 25th January 1978 to 14th February 1978 and the impugned award is dated 5th August 1980. It is contended by the management that for fixing effective date for the benefits, the Tribunal has ample discretion and the Tribunal has exercised that discretion judiciously and, therefore, the High Court ought not to interfere. In para 17 of the impugned award, the Tribunal has referred to the rival arguments for and against retrospective effect and the Tribunal has observed as follows:
I have considered the arguments advanced by Shri Gandhi in this behalf and I am of the view that the workmen of the company were amply protected as far as rise in the cost of living index number was concerned. As far as their basic pay is concerned, it has to be kept in mind that Rs. 20/- by way of ad-hoc amount and Rs. 10/- by way of interim relief have also been given for some time past. In view of these admitted facts I am of the view that no long retrospective effect should be given in the instant case.
47. Thus, the two reasons which have appealed to the Tribunal are that (i) the workmen were amply protected by the rise in the cost of living index and (ii) that Rs. 20/- by way of ad-hoc amount and Rs. 10/- by way of interim relief had been given for some time in the past. Both these reasons do not justify the conclusion for not giving the normal date of effective benefit. As far as the index is concerned, obviously the Sarabhai workers were getting the same on the basis of Ahmedabad Textile pattern and not on the more beneficial basis of Cyanamid. The benefit of rise in the index as per the Ahmedabad Textile pattern was available to the workmen of Sarabhai under the previous award. Therefore, this cannot be said to be any protection to the demand found to be justified, because, Cyanamid scales and dearness allowance rates are higher and that difference is not at all protected. The second reason is also not a correct reason because in para 25 of the impugned award the Tribunal has directed that 'the payment of interim relief of Rs. 10/- for the period 1st April 1978 to 31st December 1978 should now be adjusted towards the arrears receivable by the workmen.' Both these reasons given by the Tribunal would not justify this conclusion that retrospective effect should be given only from 1st January 1979 and not earlier.
48. In para 12 of the impugned award, the Tribunal has negatived the argument of the management that there is no significant change in circumstances after the last award and, therefore, the wage revision so soon after the earlier award could not be justified and the Tribunal has observed as follows:
When the learned Tribunal Shri I.G. Thakore gave his earlier award on 5th March 1974 the cost of living index number was 837. The said number went upto 1100 for the month of October 1979. This clearly shows that as far as the cost of living index number is concerned, it has shot up to a considerable extent justifying a wage-revision. It has also to be noted that after Shri I.G. Thakore gave his award, there have been two settlements in the Ahmedabad Cotton Textile Industry the first in June 1974 and another in June 1979 revising the wage structure of the textile employees. Further two settlements have also been arrived at in Cyanamid India Ltd., the first one on 8th October 1974 and the second one on 16th August 1978. It has also to be kept in mind that in the earlier award Shri I.G. Thakore has treated Cyanamid as well as Ahmedabad Textile Mills as comparable concerns. After the said award of Shri I.G. Thakore, wage structure of the employees in comparable concerns like Ahmedabad Textile Mills and Cyanamid India Ltd. have thus been substantially revised upwards. And the last, and the very important factor, which has a bearing on wage revision is the paying capacity of the company which in the instant case is not at all in dispute.
49. It is thus clear that there was sufficient justification for the workmen to raise new demands and when there is no dispute as to the paying capacity of the company there is no reason why the demands which are justified, should not be granted with effect from the date of demand to the extent to which these demands are found to be justified. Merely because the employer successfully delays the final adjudication or because the court is unable to decide earlier, the demands which are found to be justified cannot be delayed, otherwise there would be improper vested interest in delaying adjudication. By such delay in adjudication (whether due to tactics of the employer or due to inability of the court) neither side should suffer nor should any side unduly gain because of that. Such of the demands which are found to be justified and to the extent found to be justified ought to be normally granted from the date of the demand. However, the Tribunal may in exercise of the discretion and in the facts and circumstances of the case, give any other date between the date of the demand and the date of the award but such discretion has to be judiciously exercised and for valid and proper reasons. The Cyanamid settlement is effective from 1st January 1978. When the Tribunal held that Sarabhai should be put at least on par with Cyanamid, strong reasons are required to delay the date of benefits for Sarabhai workers.
50. In the case of Management of Wagner & Co. v. Their Workmen A.I.R. 1964 S.C. 869, the Supreme Court observed that 'technically speaking this direction cannot be said to be retrospective because it takes effect from the date subsequent to the date of the reference'. It is thus clear that while giving effective date between the date of the reference and the date of the award, the Tribunal is not giving any retrospective benefit or retrospective effect. The same view is again taken by the Supreme Court in the case of All India Reserve Bank Employees' Association v. Reserve Bank of India A.I.R. 1965 S.C. P5 in the following words:
In Wagner Co. and Ors. v. Their Workmen it has explained that restrospective operation implies the operation of the award from a date prior to the reference and the word 'retrospective' cannot apply to the period between the date of the reference and the award.
Therefore, really speaking the Tribunal has not given any retrospective effect whatsoever even though the Tribunal is of the view that some retrospective effect should be given.
51. There are several cases decided by the Supreme Court, where the benefits have been granted from different dates such as from date of demand, from a date prior to date of reference, from date of reference. In case of Jhagrakhand Colleries Pvt. Ltd. v. Central Industrial Tribunal 1960(2) L.L.J. 71 the Supreme Court held that 'normally we would be reluctant to interfere with the direction given by the appellate Tribunal in such a matter, but in the present case, modification made by the appellate Tribunal suffers from obvious infirmities'. In that case the Supreme Court held that it would not be fair or just to allow the benefit of the increase even prior to the date of the demand. Thus, the date of the demand is the first crucial date from which the benefit should flow. The Tribunal will have the discretion to give a subsequent date after the date of the demand and the date of the reference.
52. In the case of Hindustan Antibiotics Ltd. and Ors. v. The Workmen : (1967)ILLJ114SC the Supreme Court upheld retrospective effect to the award even prior to the date of the reference and held as follows:
A Tribunal ordinarily makes its award operative from the date of the references, but in exceptional circumstances it gives retrospective operation to some of the proposals.
In the case of Workmen of Orient Paper Mills Ltd. v. Orient Paper Mills Ltd. : (1969)IILLJ398SC , the Supreme Court upheld the retrospective effect from the date of demand and upheld the direction for payment of arrears of six years. In the case of Bengal Chemicals and Pharmaceutical Works Ltd v. Its Workmen 1969(1) L.L.J. 751, after referring to Hindustan Times, Kamani Metals and Hydro Engineers cases, the Supreme Court observed as follows:
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 but 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 the Hindustan Times case (1963) Supp. 2 S.C.R. 862 and as such, that direction is correct.
53. In the case of Hydro Engineers Pvt. Ltd. v. Their Workmen 1969(1) L.L.J. 713, the Supreme Court upheld the effect approximately from the date of the demand and negatived the contention that the Tribunal could have given effect only from the date of reference. The Supreme Court also observed that it is a matter of discretion for the Tribunal to decide from the circumstances of each case from which date its award should come into operation and no general rule can be laid down. The Supreme Court also observed that the court did not interfere with those awards on the ground that there was no breach of any recognised principle. 'If the Tribunal has exercised its discretion and no substantial ground is made out to show that it was unreasonably exercised' there would be no ground for interference. Conversely, if the Tribunal has not exercised the direction judiciously or has exercised it unreasonably or when a substantial ground is made out, the High Court would be bound to interfere. In Khedut Sahakari Khand Udyog Mandli Ltd. v. Its Workmen 20 G.L.R. 858, after referring to these judgments of the Supreme Court, the Division Beach of this Court set aside the phasing of payments and interfered on the ground that the phasing was not justified taking into consideration the relevant factors which the Tribunal should have taken into consideration.'
54. In F.M. Kolia v. G.S. Barot 22 G.L.R. 700 Division Bench M.P. Thakkar, C.J. (as he then was) and R.C. Mankad, J. held that at least the date of reference should ordinarily be the effective date of benefits awarded, in these words:.the proposition that it should be enforced 'ordinarily' with effect at least from the date of reference is buttressed by extremely valid, cogent, convincing and rational grounds which cannot be brushed aside. The legal theory on first principles is this. The Industrial Court makes its pronouncement in favour of the workers only when the Court is satisfied about the legitimacy and justness of the demand and considers it expedient in the interest of industrial peace.... But why should the inevitable time-lag in disposing of the reference occasion injustice to the workers? If the demand was just, it was from the date on which reference was made, not from the date of discovery that it was just or the date of pronouncement of the award. That is the basis for the proposition that the award must 'ordinarily' be made effective from the date of reference, that is to say, unless there are special reasons for not doing so.
In that case the Tribunal had not given the awarded - deamess allowance from the date of the reference on the ground that the concern was incurring losses. Even that was held to be not a valid reason for refusing the awarded benefit from the date of the reference, in a very effective and apposite analogy thus:
The question will bear examination on principle. In a way, labour is a commodity or an input which the employer needs to purchase from the open market like other raw materials, commmodities, or inputs required to be purchased from the open market in order to manufacture its products or carry on its business. Let us visualize the case of an employer who is working at a loss. When he goes to the market in order to purchase the essential inputs say coal, or oil, or cotton, or jute, or machinery or spare parts, will the supplier countenance his request for supply of goods at a lesser or concessional rate, at a rate lower than the market rate? Would the supuplier not refuse to hear the argument that he is incurring losses and show him the door? An employer will not be able to secure from the market the raw materials, coal, oil, electricity and the other materials required for the running of the factory or business at lesser rate, merely, because he is incurring losses. If the employer has a fleet of trucks, it cannot obtain oil or diesel from a petrol pump at a rate lower than the rate at which it is supplied to all other purchasers. If the producer of a commodity or supplier of goods will not sell to the respondents the commodity at a lesser price than the price obtainable in the open market, with what face can the employers contend that they are entitled to purchase the commodity in question, namely labour (which may be treated as a commodity for the purposes of the present discussion) at a rate lower than the rate at which it is made available to their counterparts and rivals? What the other factory owners have to pay for the labour, the respondents will also have to pay to their workers for they cannot claim any privileged treatment merely on account of the fact that they are incurring losses.
55. In that case the High Court had remanded the matter back to the Industrial Tribunal because a question regarding paying capacity was also required to be considered and the High Court was able to dispose of the petition within a short period of only about six months of the date of the award. If two views were possible, the High Court would not be justified in substituting its view for that of the Tribunal but when it is found that the Tribunal has committed apparent error and there is resultant miscarriage of justice, the High Court would be justified in exercising the same power as that of the Industrial Tribunal and dispose of the long pending litigation so that these benefits would reach expeditiously the concerned workmen, as held by the Full Bench of this Court in Textile Labour Association v. Ashok Mills A.I.R. 1977 Guj. 37.
56. Regarding the effective date of benefits, the following principles are deducible:
(a) Benefits can be granted with effect from the date of the demand or from a date as demanded.
(b) Retrospective operation implies operation from a date prior to the date of reference not from a date after the date of reference.
(c) Ordinarily the award should be effective at least from the date of the Reference, and in exceptional circumstances, it can be retrospective.
(d) Only in very special circumstances and for strong and valid reasons, an exception or departure can be made for giving a later effective date.
(e) Lapse of time in adjudication or loss in the industry by themselves are no valid grounds for making a departure from the normal rule.
(f) In exercise of the judicial discretion, if a Tribunal fails to apply these principles, the same can be corrected under Articles 226 & 227 as being unreasonable exercise of discretion.
57. In view of the fact that Cyanamid is held to be comparable concern and Sarabhai is required to be put at least on par with Cyanamid, there is sufficient reason to give the same benefits with effect from the same date from which the Cyanamid workers are getting, namely, 1st January 1978. In fact, the revision of pay scales in Cyanamid in 1978, is only extensions of the running pay scales and the initial pay scales have remained the same since the earlier settlement of 1974. In the present case the demands were raised in 1976 and 1977 and the References came to be made between 25th January and 14th February 1978. Moreover, there is no dispute as to the paying capacity of the employer and hence there is no reason whatsoever for not giving the benefits from the same date as Cyanamid (1-1-1978) about a month prior to the date of the reference. Just demand cannot be delayed. The delay would be unjust. We, therefore, direct that the revised pay scales, deamess allowance, adhoc amount and other monetary benefits shall be given with effect from 1st January 1978 instead of 1st January 1979 and to that extent the impugned award in para 17 is modified.
58. As a result of the above discussion we quash and set aside the findings and directions of the Tribunal on the demands of pay scales and housing scheme. The question now is what course should be adopted. The demands were raised in 1976 and we are in 1984. A long period of 8 years has already elapsed. We are also informed that after the impugned award of 5th August 1980 there have been material changes in the circumstances. The impugned award has been terminated and new demands have been raised and Reference has also been made. There is a new settlement in Cyanamid also. If we remand the matter back to the Tribunal to pass a fresh award, it is likely to create complications and hardships, and to unduly delay the final award and it is not improbable that the mattter may be again brought back to this Court against such fresh award. In somewhat similar circumstances in the case of Woolcombers of India Ltd. v. Woolcombers Workers Union and Anr. : (1974)ILLJ138SC the Supreme Court had adopted the course of calling for findings of the Tribunal in regard to the basic wages and dearness allowance in the light of the Supreme Court judgment. The Supreme Court observed as follows:
The question now is what course should be adopted? We can set aside the award and direct the Tribunal to make a fresh award after allowing the parties to produce evidence in relation to comparable concerns in the region. The other course is to call for a finding from the Tribunal in regard to basic wages and dearness allowance in the light of our judgment. The adoption of the first course may unduly delay the final award, for it is not improbable that an appeal may be filed in this Court against the fresh award. The reference was made sometime in June 1968 and five years have gone by without the award becoming final. The adoption of second course, on the other hand, is likely to avoid undue delay. It appears to us that having regard to the circumstances of this case we should adopt the second course.
59. We would also adopt the same course and direct the Tribunal to give its fresh findings on the demands regarding pay scales and housing scheme and remit the same to this court. This course would avoid undue delay and also avoid complications.
60. In the result the following directions are issued:
(i) The findings and directions of the Tribunal with regard to granting of pay scales and housing scheme are quashed and set aside and the Tribunal is directed to give its fresh findings on these issues in accordance with law and in light of the observations made in this judgment and after giving a reasonable opportunity to both the parties in that respect and to send the findings to this Court within a period of three months from the date of receipt of the writ and record;
(ii) In the meanwhile the directions as to pay scales shall continue as an interim arrangement till further orders of this court; and the arrears for the period between 1st January 1978 to 31st December 1978, shall be worked out and paid on that basis, subject to adjustment and changes as per the final orders;
(iii) The impugned award of the Tribunal in so far as the ad-hoc payment of Rs. 34/- per month is concerned, is clarified and modified so as to be payable to all the workmen of Sarabhai including temporary and badli workers;
(iv) The direction regarding the effective date of benefits is modified from 1st January 1979 and instead it is made effective from 1st January 1978 and the company is directed to make the payment of arrears within a period of three months from today;
(v) We would defer our decision on the questions of pay scales, adjustment and fitment and housing scheme till the findings of the Tribunal are received by this court.
61. At some stage of hearing both sides were agreeable to have the question of equivalent pay scales and other questions resolved with the help of agreed outside agency such as a mediator. If they still so desire and agree, it will be open to them to move this Court for modification. Liberty to apply.
Order accordingly. Record to be returned forthwith. Stand over till 30th April 1984.