Karnataka High Court
Karnataka Film Chamber Of Commerce vs State Of Karnataka on 17 April, 1986
Equivalent citations: ILR1986KAR2183, (1987)ILLJ182KANT
ORDER
1. This is the third round of litigation between the industries covered by the Minimum Wages Act and the workmen who are the employees in the said industries and I am not so sure that this will be the final round of litigation between the parties. The petitioners have questioned the validity of the Minimum Wages Notifications notified by the State Government in the Karnataka Gazette dated 20th March, 1986 fixing certain rates of Minimum wages to the workmen employed in the Film Industry, Hotel Industry, Printing Industry, Tailoring, Plywood and other industries. These Notifications admittedly were made by the State Government pursuant to the order of this Court in the earlier batch of Writ Petitions filed by the very same employers and also by the workmen employed in the Hotel Industries challenging the validity of the Notifications made in the year 1984 fixing certain rates of minimum wages in the aforesaid industries. Those Writ Petitions were partly allowed by this Court by its Judgment dated 24th January, 1985 and certain directions were issued by this Court to the State Government to re-do the minimum wages Notifications published on 24th May, 1984. The 1984 Notifications were not quashed by this Court but certain directions were given by this Court to the State Government to re-do the Notifications in the light of the observations made by it.
2. The main grievance of the petitioners in these petitions is that the impugned Notifications in these petitions are not in accordance with the directions made by this Court in the earlier Writ Petitions (hereinafter referred to as the ASPINWAL Case). It is further submitted by the petitioners that what has been fixed under the impugned Notifications are not the minimum wages as required to be fixed under Section 4(1)(i) of the Minimum Wages Act (in short the 'Act') and therefore the said Notifications are wholly without jurisdiction.
3. Certain facts which are not in controversy between the parties will have to be stated before considering the competing contentions of the parties in these Writ Petitions.
4. Certain proposals to revise the minimum wages in the petitioners' industries were made by the State Government on the 22nd July, 1981 and objections and suggestions were called for from persons likely to be affected by the said proposals. After considering the objections and suggestions, final notifications were issued by the State Government on 24th February, 1982 fixing certain rates of minimum wages and those notifications were challenged by the petitioners in W.P. No. 11521 to 11525 and other connected Writ Petitions. This Court quashed the aforesaid notifications and directed the State Government to re-constitute the Karnataka State Minimum Wages Advisory Board and to place all the objections and suggestions received by it along with its views before the said Board for its recommendations. Accordingly, the State Government reconstituted the Advisory Board by its order dated 29th August, 1983 and placed the objections and suggestions received and considered by it before the Board and consulted the Board before it issued the Notifications dated 24th May, 1984. These notifications also were challenged by the petitioners and by certain sections of the workmen in the ASPINWAL case. This Court by its Judgment dated 24th January, 1985 issued a Writ in the nature of mandamus to the State Government to refix the rates of dearness allowance in some cases and wages and dearness allowance in some other cases. The Court also made certain other directions fixing the date on which the refixation of dearness allowance or the wages as the case may be should come into effect. Accordingly, the State Government consulted the Advisory Board in the light of the Judgment of this Court in ASPINWAL case, reconsidered the rates of dearness allowance payable to the employees in the various industries and refixed the cost of living allowance effective from 1st April, 1985 as per details more particularly mentioned in the impugned Notifications. In the Film Industry the Notification provided that :
"In addition to the basic wage mentioned in the schedule to the Notification No. SWL. 82 LMW 83, dated 24th May, 1984 the employees shall be paid a Cost of Living Allowance at the following rates for increase over and above 470 points in Consumer Price Index for industrial workers on the basis of State Average in the series of 1960-100 base."
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Classification Rate of Cost of living Allowance
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1. Employees getting Rs. 10 2 paise per day per point per day or less than Rs. 10 per day or Rs. 300 or less than Rs. 300 per month.
2. Employee getting more 2.5 paise per day per point than Rs. 10 per day or Rs. 15 or less than Rs. 15 per day or Rs. 301 to 450 per month.
3. Employees getting more 3 paise per day per point than Rs. 15 per day or above Rs. 451 per month.
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In the Plywood Industry the impugned Notification provided for that :
"In addition to the basic wage mentioned in the schedule to the Notification No. SWL 93 LMW 83 dated 24th May, 1984 the employees shall be paid a Cost of Living Allowance at the following rates for increase over an above 470 points in Consumer Price Index for Industrial Workers on the basis of State Average in the series of 1960-100 base."
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Classification of Employees Rates of Cost of living Allowance
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1. Employee getting Rs. 10 2 paise per day per point per day or less than Rs. 10 per day or Rs. 300 or less than Rs. 300 per month.
2. Employees getting more 2.5 paise per day per point than Rs. 10 per day or Rs. 15 or less than Rs. 15 per day or Rs. 301 to Rs. 450 per month.
3. Employees getting more 3 paise per day per point. than Rs. 15 per day or above Rs. 451 per month
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In the Printing Industry the impugned Notification provided that :
"In addition to the basic wage mentioned in the above schedule, the employees shall be paid a Cost of Living Allowance at the following rates for increase over and above 470 points in Consumer Price Index for industrial workers on the basis of State Average in the series of 1960-100 base.
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Classification of Employees Rates of Cost of living Allowance
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1. Employees getting Rs. 10 per day 2 paise per day per point or less than Rs. 10 per day or Rs. 300 per month or less than Rs. 300 per month
2. Employees getting more than Rs. 10 2.5 paise per day per point per day or Rs. 15 or less than Rs. 15 per day or Rs. 301 to Rs. 450 per month.
3. Employees getting more than Rs. 15 3 paise per day per point per day or above Rs. 451 per month.
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In the Hotel Industry the impugned Notification provided that :
"In addition to the basic wage mentioned in the above Schedule, the employees shall be paid a Cost of living Allowance at the following rates for increase over and above 470 points in Consumer Price Index for industrial workers on the basis of state Average in series of 1960 = 100 base.
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Classification of Employees Rates of Cost of living Allowance
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1. Employees getting Rs. 10 per day 2 paise per day per point or less than Rs. 10 per day or Rs. 300 per month or less than Rs. 300 per month
2. Employees getting more than Rs. 2.5 paise per day per point 10 per day or Rs. 15 or less than Rs. 15 per day or Rs. 301 to Rs. 450 per month
3. Employees getting more than Rs. 15 3 paise per day per point per day or above Rs. 451 per month.
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Where food is supplied to workmen, the following sums are to be deducted from the wages in the Zone mentioned against each.
Amount to be deducted :
Zone A : Rs. 90/- per month Zone B : Rs. 80/- per month Zone C : Rs. 75/- per month The workmen of the Hotel Industries have challenged the fixation of basic wages in so far they relate to the two categories of workmen namely Cooks and Assistant Cooks. In the Garment Industry the impugned Notification provided that :
"In addition to the basic wage mentioned in the above schedule, the employees shall be paid a Cost of Living Allowance at the following rates for increase over and above 470 points in Consumer Price Index for industrial workers on the basis of State Average in the series of 1960-100 base.
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Classification of Employees Rates of Cost of living Allowance
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1. Employees getting Rs. 10 per day 2 paise per day per point or less than Rs. 10 per day or Rs. 300 per month or less than Rs. 300 per month
2. Employees getting more than Rs. 10 2.5 paise per day per point. per day or Rs. 15 or less than Rs. 15 per day or Rs. 301 to Rs. 450 per month
3. Employees getting more than Rs. 15 3 paise per day per point per day or above Rs. 451 per month.
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5. The rates of minimum wages proposed in the proposals in the year 1981, the rates of minimum wages fixed in the final notifications in the years 1982 and 1984 and the rates of minimum wages fixed in the impugned notification should be noticed before I proceed to consider the contentions of the Learned Counsel for the petitioners and the contesting respondents. In the Tailoring Industry the basic wages proposed in the year 1981 at the highest was Rs. 16.35 per day and the minimum wage was this basic wage plus D.A. linked to cost of living allowance for increase over and above 470 points in Consumer Price Index on the basis of State Average in the series of 1960 = 100 base. In the year 1982, the final notification made under the Act prescribed a consolidated wage of Rs. 16.35, that is to say, the minimum wage for the highest skilled workmen consisted of a basic wage and D.A. aggregating to Rs. 16.35. This notification was quashed by this Court in the first round of litigation and consequently a fresh notification was made in the year 1984 fixing Rs. 20/- as basic wage, and D.A. linked to 600 points CPI. This was the notification challenged by the Tailoring Industry in the Writ Petition before Rama Jois, J. Pursuant to the direction made by Rama Jois, J., the impugned notification was made fixing the basic wage for highest category at Rs. 18/- per day and D.A. linked to 470 CPI base. It could thus be seen that the basic wages in the impugned notification was reduced by Rs. 2/-. But the D.A. was linked to 470 points and not to 600 points, obviously, with a view to neutralise the loss caused to the workmen by the reduction in the basic wage by Rs. 2/-. In the petitions filed by this Industry before Rama Jois, J., the direction made by the Learned Judge was that the State Government should refix the wages including the dearness allowance (in short the D.A.). Therefore in the Garment Industry it was open to the State Government to revise not only the basic wage but also the D.A. In the Printing Industry the basic wage at the highest in the year 1981 was proposed at Rs. 15.40 paise and D.A. was linked to 470 CPI. In the final notification made in the year 1982, a consolidated wage including D.A. was fixed at Rs. 15.40 pasie. However, in the year 1984, the basic wage was increased to Rs. 16 per day and D.A. was linked to 600 CPI. But in the impugned notification the basic wage was retained at Rs. 16/- per day and D.A. was linked to 470 CPI. The direction made by this Court in ASPINWAL was that the State Government should reconsider and revise the rates of D.A. payable to the workmen.
In the Plywood Industry in the notification made in the year 1984, the basic wage of Rs. 15/- per day was fixed for highly skilled workmen and the D.A. was linked to 600 CPI. In the impugned notification, the basic wage remained the same at Rs. 15/- per day and the D.A. was linked to 470 CPI. The direction made by this Court was to revise the D.A. in the light of the observations made in ASPINWAL.
In the Cinema Industry, a consolidated wage of Rs. 470/- per month was fixed for one category of workmen in the year 1978. In year 1981, in the proposal made by the State Government, the basic wage was Rs. 264.40 per month and D.A. was linked to 470 CPI. But in the year 1982 in the final notification a consolidated wage of Rs. 467/- was prescribed as the minimum wage. However, in the year 1984, the basic wage was fixed at Rs. 467.50 paise and the D.A. was linked to 600 CPI. But in the impugned notification, the basic wage remained the same viz., Rs. 467.50 and the D.A. was linked to 470 CPI. The direction made by this Court was to reconsider and refix the D.A. in the light of the observations made in ASPINWAL. In the Hotel Industry the basic wage for one category of workmen was proposed in the year 1981 at Rs. 370/- per month and the D.A. was linked to 470 CPI. However, in the final notification of the year 1982 a sum of Rs. 370/- per month was fixed as minimum wage which was a consolidated wage. In the year 1984, the basic wage was fixed at Rs. 500/- per month and the D.A. was linked to 600 CPI. But in the impugned notification the basic wage was brought down to Rs. 425/- and the D.A. was linked to 470 CPI. The direction made by this Court to the State Government regarding the Hotel Industry was to reconsider and refix the rate of D.A. effective from 1st April, 1985 and to refix the amount of deduction in lieu of food, shelter etc., furnished to the employees and also to reconsider and refix the rates of wages of various categories of employees in Hotels and to decide afresh the wages to be fixed for Store Keepers. It could thus be seen from the minimum wages fixed by the State Government in these industries since 1978, that they had in view the proposal made in the year 1981 fixing a certain rate of basic wage and D.A. linked to 470 CPI as minimum wages. However, in the year 1982, presumably on account of the representation made by the Industry, they did away with the D.A. and fixed the minimum wage at the level of basic wage in year 1981. But in the year 1984, they increased the basic wage but brought down the D.A. by linking it to 600 CPI. In the year 1986, the basic wage which was fixed in the year 1984 remained the same in all industries except the Hotel Industry. But the D.A. was linked to 470 CPI. Therefore, a definite pattern is discernible in the fixation of minimum wages since the years 1978 to 1986. In 1978, the State Government for reasons best known to it fixed the minimum wage by making it a consolidated wage i.e., inclusive of D.A. Then in the year 1981 in the proposal it contemplated of fixing the minimum wage by a basic wage plus D.A. linked to 470 CPI, but in the year 1982 it again reverted back to consolidate wage. However, in the year 1984, it increased the basic wage, but reduced the D.A. by linking it to 600 CPI. But in the year 1986, instead of increasing the basic wage, it increased the D.A. by linking it to 470 CPI.
6. Much had been argued by the Learned Counsel for the petitioners on the basis of the judgment in ASPINWAL. What exactly is the meaning of neutralisation of the cost of living for the purpose of fixation of D.A. was not, in my humble view, either argued or established in Aspinwal since the most authoritative decision that dealt with the factor of neutralisation was not placed before this Court in ASPINWAL. In Ahmedabad Millowners' Association Vs. Textile Labour Association, Ahmedabad (1966-I-LLJ-1 at PP 20-21), the scope of neutralisation of cost of living by fixing a certain amount of D.A. to mitigate the hardship caused to the workmen by the rise in the price of various commodities was considered by the Supreme Court. The Supreme Court dealt with the matter in great detail in view of the criticism levelled by the Mill-Owners' Association that the CPI index on which reliance was placed by the Industrial Tribunal for making the impugned award did not correctly reflect the base for fixation of D.A. In that connection, Chief Justice Gajendragadkar who wrote the Judgment for the Court and whose experience on the Bench in labour jurisprudence could be matched by very few in the judiciary observed as follows at PP 20-21.
"Let us now see on what principles and methods the impugned survey was made. It is necessary to begin the discussion of this question with the observation :
That the consumer price index number measures nothing but changes in prices, as they affect a particular population group; and so it is really a price index number as distinct from a cost of living index number. In fact, these indices used to be termed as cost of living index numbers in the past, but in order to make their meaning clear, it was decided by Government to change the name to consumer price index numbers in accordance with internation recommendations and growing practice in other countries. Most of the State Governments compiling such index numbers have also adopted this us age. ("A Guide to Consumer Price Index Numbers" issued by the Labour Bureau, Ministry of Labour and Employment, P. 5) This index number is intended to show over a period of time the average percentage change in the prices paid by the consumers belonging to the population group proposed to be covered by the index for a fixed list of goods and services consumed by them. The average percentage change measured by the index, is calculated month after month with reference to a fixed period. This fixed period is known as the "base-period" of the index, and since the object of the index is to measure the effect of price-changes only, the price-changes have to be determined with reference to a fixed list of goods and services of consumption which is known as a fixed "basket" of goods and services.
The index does not purport to measure the absolute level of prices but only the average percentage change in the prices of a fixed basket of goods and services at different periods of time. There are certain preliminary considerations which are relevant in the construction of consumer price index numbers. The first consideration is the purpose which the index is intended to serve, and that necessarily involves the definition of the group of consumers to which the index is intended to relate. Then it is necessary to determine the consumption level and pattern of the population group at a period of time which generally becomes the base-period of the index numbers. For that purpose, a list of commodities and services has to be made. Usually, this list would contain items of goods, fuel and light, clothing, and others; items of services, such as barber charges, bus fare, doctor's fee, etc., have also to be selected. It is the combined total of the items of commodities and services that constitutes the basket. Then follows a description of the quality of each commodity and service through which price changes have to be measured. Generally, one quality which is popularly consumed by the population group is selected for each commodity and service. The importance or weight which has to be attached to each commodity or service is also a material factor. For instance, if rice is considered to be twice as important as wheat in the consumption pattern, the weight of rice will be 2 in relation to 1 of wheat.
Having determined the consumption level and the pattern of the population group, the next task to attempt is to arrange for the regular collection of price data for the various qualities of commodities and services which enter the basket. With this material, the consumer price index has to be compiled from month to month subsequent to the base-period. That, shortly stated, is the nature of the preliminary considerations which have to be borne in mind while constructing the consumer price index numbers.
We have just noticed the theory of weights on which weighing diagrams are prepared. Weights are intended to indicate the importance attached to the percentage changes in the prices paid by consumers for different items (commodities and services) of consumption. Accordingly, each item in the index, is given, what is called in technical language, a "weight" to represent the relative importance of the price-changes recorded for that item. This weight means nothing more than the percentage of expenditure on each item of goods and services in relation to the total expenditure. It will thus be seen that the main basis for determining the weights of respective commodities and services is the investigation of the family budget; and that emphasizes the importance and significance of a proper investigation. During the course of investigation, data are collected on all items on which money has been defrayed by families; but only such items as involve consumption expenditure are included in the average budget. Even so, it is only selected items which find a place in the index calculations, because it is obviously neither practicable nor necessary to include all items featuring in the average budget. Since only a sample of items from each group is included in the index, it becomes necessary to enquire as to what happens to other items featuring in the average budget but not included in the index. Their weights are added or distributed to the items included in the index, so that the total expenditure of the average budget is fully taken into account in the weights adopted for the index. This process is known as "imputation of weights." Besides the weights the other set of primary data which enter into the compilation of series of consumer price index numbers are the prices and that emphasizes the importance of collecting material data in respect of prices. The investigator, therefore, has to bear in mind all the relevant factors that ultimately go to the construction of the index and has to carry on his investigation in a proper and scientific way."
7. After he relinquished his high office, as the Chief Justice of India, he was appointed as the Chairman of the D.A. Commission by the Central Government. In his report after referring to the recommendation of the two Pay Commissions constituted by the Central Government he observed as follows :
"It will be noticed that in attempting to define "dearness allowance", the Commission referred to it as "a device to protect, to a greater or lesser extent, the real income of wage earners and salaried employees from the effects of rise in prices". This would support the view that dearness allowance is a wider concept and is intended to neutralise the erosion of the real income of wage earners. On the other hand, the final recommendation made by it in regard to the actual payment of dearness allowance show that it drew a line, for the time being, at the pay level of Rs. 300 per mensem. This decision indicates that the Commission thought that dearness allowance should protect wage-earners at, or a little above, the subsistence level. It is consistent with the basis adopted by the Commission in fixing the salaries of employees drawing below Rs. 300 per mensem. It is clear from the report that the salaries of employees drawing below Rs. 300 per mensem were constructed solely in relation to the 1949 price level. In other words, having regard to the mode adopted by the Commission in constructing the wage structure of this category of employees, it was logical that the Commission should have recommended the payment of dearness allowance to those employees whenever the relative index showed a rise. If the relative index showed a fall, the Commission recommended decrease in dearness allowance in a corresponding measure. As will appear later, the specific recommendation of the Commission is in accord with our view of the basic concept of dearness allowance."
At paragraph 3.30 of his report, he observed :
"We may now proceed to consider the basic character of dearness allowance in its proper perspective. Two views are possible in regard to the scope of this concept. One view is that dearness allowance should protect, to a greater or lesser extent, the real wages or salaries paid to the employees. Since pay revision is not frequently undertaken in this country, it is necessary to give such protection when the prices are rising continuously. It may be that the protection may be proportionately larger, and, in relation to the rising Index, available earlier, for employees drawing lower salaries than for those on higher salaries. On this view, no category of employees, however high paid, is a priori excluded from the purview of dearness allowance."
8. Though this Report was primarily meant for the fixation of D.A. in the wage structure of Government Employees, the Commission had in view the report of the Fair Wages Committee in the year 1947 and the problem of wage structure frequently considered in industrial adjudication. As can be seen from Para 4.2 of the report it referred to the concept of fair wage and minimum wage in industrial adjudication and observed as follows :
"Ever since the Fair wage Committee considered the question of fair wages in 1947, the problem of wage structure has been frequently considered by industrial adjudication. The concepts of "living wage", "fair wage" and "minimum or subsistence wage" have been examined in the context of this problem. The content of these expressions is elastic and varying. The terms "basic wage", "fair wage" and "living wage", like their variants "the poverty level", "the subsistence level" and "the comfort or decency level" are, in a sense, relative terms. Their content would differ from country to country and, even in the same country, from time to time. The concept of "living wage" is basically a hypothetical and relative concept. Its connotation depends upon the philosophy of social justice that may govern the socio-economic affairs of a country at given time, applied or implemented in the light of the prevailing state of the national economy. What is a fair wage in one country may be a living wage in another. In all progressive and democratic countries, the wage structure is not regarded merely as a matter governed by the rule of the market; ethical considerations are also treated as relevant. That is why it is difficult to define precisely or concretely the content of these concepts. One thing that is clear and is universally recognised by industrial adjudication in our country is that no employer in any organised industry can engage an employee at wages below the subsistence level. If an employee is engaged on subsistence wages, and is exposed to the risk involved in the rise in the prices of essential commodities, he becomes entitled to protection against this risk. It is in the light of this basic principle that we now define the subsistence level salary in the present context"
In Chapter V, para 5.3 of the report, it is stated :
"It will thus seem that these sub-paragraphs assume that the function of dearness allowance is to attempt to neutralise the erosion of the real value of the salaries of public servants. If dearness allowance were interpreted to mean and include a device to neutralise the erosion of the real value of salaries, it would naturally take within its sweep not only public servants at the level of subsistence wages, but all public servants without any exception. The phenomenal rise in prices has obviously eroded the true value of the salaries of all public servants and, speaking generally public servants belonging to all categories, high and low, have to face certain hardships. The degree of these hardships differs and even the quality of the hardships is different according as the employees are at the subsistence level or much above it. But hardship there is, and if dearness allowance is designed to protect the public servants from such hardship, the questions to which the relevant terms of reference have drawn our attention would become material. If, on the other hand, dearness allowance is intended to protect only the public servants who draw salaries at or a little above the subsistence level, these questions become irrelevant, because we have no doubt that so far as the public servants at the subsistence level or a little above it are concerned, the Government must give them enough protection to face the hardship resulting from the rise in the prices of essential commodities. As early as 1947, the First Pay Commission repelled the contention of the Government against giving adequate protection by way of dearness allowance to the law class employees by observing; "Any possible repercussions, financial or economic, which some measure of relief given to them (subsistence level employees), may give rise to, must, as we have already stated, be met by other appropriate steps." What was true in 1947, is equally, if not more, true today."
I have referred to this observation with a view to meet arguments of the Learned Counsel for the petitioners that any neutralisation of the cost of living exceeding 100% would have serious repercussions on the inflationary conditions now prevailing in this Country. One significant observation that was made in this Report is found in Chapter VII para 7.15 :
"If relative price stability is achieved within two years, the question of making further additions to dearness allowance thereafter may not arise. Nevertheless, the Government will have to consider whether a part of the dearness allowance should not be absorbed in the basic pay and that would involve the revision of the pay structure of the categories of employees to whom dearness allowance is admissible. Even if prices do not rise, the question of the revision of the pay structure of this class of employee will have to be examined at the end of two years."
I have quoted these observations from the Report of the D.A. Commission with a view to bring out the importance of the revision of the basic wage from time to time while the Government is engaged in the exercise of revising the minimum wage in terms of Section 4 of the Act. Section 4 of the Act also is a definite indication that basic wage is an integral part of the minimum wage. Section 4.1 postulates that the minimum wage fixed or revised by the appropriate Government under Section 3 may consist of a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers; or a basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorised; or all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any. Therefore when the question of neutralisation of the cost of living arises by payment of D.A. it necessarily follows that the Court should keep in view whether there had been an increase or decrease in the basic wage in a particular industry over a given period of time for the purpose of determining whether the neutralisation factor adopted by the State Government exceeds 100% or 200% or 300% in a given situation.
The main attack made by the petitioners in these Writ Petitions is that the Government did not keep in view the limit to the percentage of neutralisation due regard being had to the directions of this Court in ASPINWAL. So what was the decision of this Court in ASPINWAL should be examined first. Whether in ASPINWAL the parties were at issue on the correctness or otherwise of the basic wages fixed in the 1984 Notifications would necessarily arise for consideration. Is there any indication to that effect in the Judgment of this Court in ASPINWAL ?
The impugned Notifications in ASPINWAL were challenged on various grounds. They are found in paragraphs-5 to 17 of the Judgment. The general points urged in that case are as follows :
(i) The constitution of Advisory Board under Section 9 of the Act was not in accordance with law.
(ii) The procedure adopted by the Government in consulting the Advisory Board was also not in accordance with law;
(iii) The employees should have been given an opportunity of being heard early before their objections were considered by the State Government;
(iv) The impugned notifications were bad because of bias on the part of certain members who constituted the Advisory Board;
(v) The absence of the Chairman and certain members of the Board had vitiated the proceedings of the Board;
(vi) Defects in the proceedings of the Board; and
(vii) Challenge to the rate of D.A. on the ground that it was highly excessive and therefore invalid.
It is only in para-16, the parties were at issue on the quantum of the D.A. fixed by the State Government. While considering the rate of neutralisation for every 5 points over and above 600 points CPL, this Court observed as follows :
"As basic wages plus the dearness allowance fixed under the Act together constitutes 'minimum wages', they have to be fixed in conformity with the Act. The petitioners have calculated the percentage of neutralisation provided by the rate of dearness allowance fixed in impugned notifications as indicated earlier, and say that it works out to 300 per cent on the ground that the basic wages fixed in the impugned notification, is 'minimum wages' legitimately payable, if the cost of living index does not cross 600, Thereafter, they submit that the extent of neutralisation provided for, has to be calculated by comparing the wages per point as fixed in the impugned notification, with the extent of increase provided for."
"The calculation made for the employees, however, is on the basis that the increased wages payable including dearness allowance at C.P.I. Points 605 or 610 as the case may be, should be divided by 605 or 610, as the case may be, and on the said basis the percentage of neutralisation should be arrived at as indicated in the statement furnished by them, extracted earlier, which shows that neutralisation was approximately cent per cent only and not more. One other method of calculation furnished, which is said to have been adopted in the L.I.C. was to calculate on the basis of minimum wage base of 1960 when the C.P.I. was 100, which is extracted earlier. On that basis, the Learned Counsel for workmen maintained that neutralisation, provided for did not even work out to 50 per cent as indicated in that statement."
"It appears to me that the method adopted by the employees to show that the rate of dearness allowance fixed provided was less than 100 per cent neutralisation or at any rate not more than 100 per cent neutralisation, relying on the basic level of 100 points in 1960, is really an attack against the basic rate of minimum wages fixed in the impugned notification. When the basic wages fixed are 'minimum wages' at or upto 600 points, the contention of the petitioners that the extent of neutralisation provided for, has to be found out by the proportion of increase for every point or five points in comparison to the rate which works out to per point or per five pints if the basic pay fixed in the impugned notification is divided by 600 points is well founded. Learned Counsel for the workmen did not dispute that if the consumer index does not cross 600 points at all, there would be no scope for the increase of wages. For these reasons, the contention of the petitioners that the rate of increase of dearness allowance provided for in the impugned notification amounts to 300 per cent neutralisation and contravenes Section 4(1)(i) of the Act has to be upheld (See : C. V. K. U. Sahakari Mandi Vs. G. S. Barot ."
"There is intrinsic material also to demonstrate that the rate of dearness allowance fixed is excessive as contended for the petitioners. On the recommendation of the Board, the State Government has issued notification fixing minimum wages in or about the same time in respect of employees of coffee plantations. The relevant portion of it reads :
"In addition to the basic wage mentioned in the Schedule, the employee shall be paid Cost of Living allowance 0-2 paise per point per day over and above 600 points of rise/increase in the Consumer Price Index figure for Industrial workers on the basis of State Average in the series of 1960-100 base.
"The calculation of variable D.A. rate will be once in a year. The D.A. shall be calculated every year on the 1st April on the basis of the average of the indexes preceding 12 months i.e., January to December. It may further be noted that the D.A. will be calculated on a sliding basis going higher or lower depending on the cost of living."
"It may be seen, the rate of dearness allowance provided for in the above notification is two paise per point, whereas it is five paise per point in the case of all other employments. If two paise per point constitutes cent per cent neutralisation, it follows that five paise per point would constitute 250 percent neutralisation. This is an additional ground to hold that the rate of dearness allowance fixed in the impugned notification is arbitrary and contravenes Section 4(1)(i) of the Act."
9. Based on these observations of this Court, the contention of the learned Counsel for the petitioners is that the basic wages fixed under the impugned notifications for the various industries did cover the cost of living upto 600 CPI. So, anything over 600 CPI, will have to be neutralised by payment of D.A. but by the impugned notifications an additional burden is cast on the employers by making them pay D.A. for every 5 points' rise over 470 CPI.
10. What is a basic wage in an industry which is governed by the provisions of the Act was neither considered by this Court nor was it canvassed by the parties before this Court. As could be seen from the finding of this Court in Para-17 of its Judgment on the question of D.A., it proceeded on the basis that in the impugned 1984 notifications the rate the rate of D.A. amounted to 300% neutralisation and contravened Section 4(1) of the Act. That is to say the basic wage fixed under Section 4(1) of the Act, plus D.A. linked to 600 C.P.I. base would amount to 300 per cent neutralisation and thereby contravened Section 4(1) of the Act. The fact that this Court did not consider the structure of the basic wage for the purpose of fixing the minimum wage is clear from the manner in which this Court dealt with the Coffee Curing Industry in para-18 of ASPINWAL. Under sub-para (B) of para-18 what this Court considered was whether fixation of wages in respect of different categories of employees was arbitrary and therefore ultra-vires the powers conferred under the Act and also violative of Article 14. If as contended by the Learned Counsel for the petitioners that the quantum of basic wage also was in the mind of this Court while upholding the contentions that there was neutralisation over 300%. I fail to see why in para-17 of the Judgment of this Court, there was not discussion at all on the quantum of basic wages for different categories of employees in different industries. But, however, while dealing with the Tailoring Industry, a specific issue had been raised on the fixation of wages in respect of different categories of employees. Likewise in the case of Hotel Industry both employers and workmen had challenged the fixation of basic wage. One more fact which should be noticed in appreciating the contention of the petitioners is that they argued their case on the basis that a minimum wage under Section 4(1) of the Act necessarily should consist of basic wage and Dearness Allowance. The language of Section 4 of the Act, does not lend itself such an interpretation. What Section 4(1) says is that any minimum rate of wages fixed or revised by the appropriate Government in respect of scheduled employments under Section 3 may consist of a basic rate of wages and a special allowance ... etc. On the plain terms of Section 4(1) of the Act, it is clear that the payment of D.A. would arise only if the basic wage fixed for a particular category of workmen fell short of the minimum wage which the State Government has to fix taking into consideration the needs of the worker's family consisting of three consumption units. If this aspect of fixation of minimum wages is kept in view, it would be possible for this Court to arrive at a proper conclusion on the correctness of the methodology adopted by the Sate Government in fixing the minimum wages under the various impugned notifications.
11. The Cases of the Supreme Court on this point support the view that I have taken on the relevancy of the basic wages in the fixation of minimum wage in the schedule Industries. In Unichoyi (U) and Others vs. State of Kerala (1961-I-LLJ 631 at 637) Justice Gajendragadkar he then was, speaking for the Court, observed as follows :
"It is, therefore, necessary to consider what are the components of a minimum wage in the context of the Act. The evidence led before the committee on fair wages showed that some witnesses were inclined to take the view that the minimum wage is that wage which is essential to cover the bare physical needs of a worker and his family, whereas the overwhelming majority of witnesses agreed that a minimum wage should also provide for some other essential requirements such as a minimum of education, medical facilities and other amenities. The committee came to the conclusion that a minimum wage must provide not merely for the bare subsistence of life but for the preservation of the efficiency of the worker, and so it must also provide for some measure of education, medical requirements and amenities. The concept about the components of the minimum wage thus enunciated by the committee have been generally accepted by industrial adjudication in this country. Sometimes the minimum wage is described as a bare minimum wage in order to distinguish it from the wage-structure which is "subsistence plus" or fair wage, but too much emphasis on the adjective "bare" in relation to the minimum wage is apt to lead to the erroneous assumption that the minimum wage is a wage which enables the worker to cover his bare physical needs and keep himself just above starvation. That clearly is not intended by the concept of minimum wage. On the other hand, since the capacity of the employer to pay is treated as irrelevant it is but right that no addition should be made to the components of the minimum wage which would take the minimum wage near the lower level of the fair wage, but the contents of this concept must ensure for the employee not only his sustenance and that of his family but must also preserve his efficiency as a worker. The Act contemplates that minimum wage-rates should be fixed in the scheduled industries with the dual object of providing sustenance and maintenance of the worker and his family and preserving his efficiency as a worker."
In Kamani Metals and Alloys Ltd. vs. Their Workmen (1967-II-LLJ-55 at pp 57-58), the Supreme Court observed as follows :-
"Fixation of a wage-structure is always a delicate task because a balance has to be struck between the demands of social justice which requires that the workmen should receive their proper share of the national income which they help to produce with a view to improving their standard of living, and the depletion which every increase in wages makes in the profits as this tends to divert capital from industry into other channels thought to be more profitable. The task is not rendered any the easier because conditions vary from region to region, industry to industry and establishment to establishment. To cope with these differences certain principles on which wages are fixed have been stated from time to time by this Court. Broadly speaking, the first principle is that there is a minimum, wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of establishment or the availability of workmen on lower wages. This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity. The second principle is that wages must be fair, that is to say, sufficiently high to provide a standard family with food, shelter, clothing, medical care and education of children appropriate to the workman but not at a rate exceeding his wage-earning capacity in the class of establishment to which he belongs. A fair wage is thus related to the earning capacity and the workload. It must, however, be realised that "fair wage" is not "living wage" by which is meant a wage which is sufficient to provide not only the essentials above mentioned but a fair measure of frugal comfort with an ability to provide for 1 old age and evil days. Fair wage lies between the minimum wage, which must be paid in any event, and the living wage, which is the goal. As time passes and prices rise, even the fair wage fixed for the time being tends to sag downwards and then a revision is necessary. To a certain extent the disparity is made up by the additional payment of dearness allowance. This allowance is given to compensate for the rise in the cost of living. But as it is not advisable to have a 100 per cent neutralisation lest it lead to inflation, the dearness allowance is often a little less than 100 per cent neutralisation. In course of time the addition of the dearness allowance does not sufficiently make up the gap between wages and cost of living and a revision of wages and or dearness allowance then becomes necessary. This revision is done on certain principles."
The Supreme Court in the that case was dealing with an award made by the Industrial Tribunal where the basic wage was fixed 20 years ago and a demand was made for the revision of wages.
12. In M/s. Killick Nixon Ltd. Vs. Killick & Allied Companies Employees' Union (1975-II-LLJ 53 at pp 55-56), the Supreme Court on the question whether there should be imposition of ceiling on D.A. made certain observations on the concept of of D.A. prevailing in this Country. In para 6 of the Judgment, the Supreme Court observed : at page 55 "Various expert committees and commissions have dealt with the question of wages and D.A. from time to time. Dearness allowance as such is not known in foreign countries with the exception of Ceylon and Pakistan Whenever there is any significant rise in the cost of living in foreign countries there is a revision of wage rather than payment of any D.A. as such D.A. in India is a relic of the First World War to cope with the rise of cost of living although then in the shape of adhoc payments not linked to any consumer price index. During the Second War it was introduced in the form of a Grain Compensation Allowance to compensate the hardship of the employees for the rise in the prices of foodgrains. So far as the Central Government employees were concerned, the Government constituted the First Pay Commission in 1947 to examine the wage structure. The Government of India also set up a Committee on Fair Wages and the report was submitted in June 1949. A Second Pay Commission was also constituted by the Government in 1959. The Government of India in August 1964 constituted a One-man Independent Body to enquire into the question of D.A. payable to the Central Government employees and the report was submitted in January 1965 by Shri S. K. Das. In July 1966, the Government of India appointed a Dearness Allowance Commission presided over by Shri P. B. Gajendragadkar. The Commission examined the principles which should govern the grant of D.A. to Central Government employees in future and was also required to review the formula for the grant of D.A. as recommended by the Second Pay Commission and to recommend, changes, if any. In December 1966, the Government of India set up a National Commission on Labour presided over by Shri P. B. Gajendragadkar with exhaustive terms of reference and the Commission submitted its report on August 28, 1969. Then in sequence came the report of the Third Pay Commission in 1973. The parties have extensively quoted from the above reports during arguments."
Referring to the report of the National Commission on Labour, the Supreme Court quoted the observations of the Commission at para - 9 of its Judgment as under at page 56 "We consider that payment of D.A. has to be viewed in broader context of wage policy, many elements of which have been discussed in the previous chapter. In a developing economy where price stabilisation has proved ineffective, or the inflationary potential cannot be controlled, any arrangement for compensating for price rise will have its raison d'etre. At the same time, a direct linkage between a rise in the index and D.A. may create problems for price stabilisation. It can hardly be disputed that the index is the best available indicator of changes of price level. The reason for a disproportionately high D.A. is the fixation of basic wage on a date far remote from the present.' (Para 16.39, page 240).
The Commission further observed : at p 56 "It is obvious that unless money wages rise as fast as the consumer prices, it would result in an erosion of real wages. But the extent of its impact will depend on the margin of cushion available at different levels of income .... We accordingly recommend that 95 per cent neutralisation should be granted against rise in cost of living to those drawing minimum wage in non-scheduled employments". (Para 16.47, page 242) The Third Pay Commission in its Interim Report made some significant observations :
"We need hardly emphasize that it would be an exercise in futility to keep on increasing the emoluments of Central Government Employees, if these increases are largely wiped out soon afterwards by increases in prices of goods and services. There is, therefore, paramount need to maintain price stability and we are confident that the Government will take all necessary fiscal, monetary and other measures, including control over production and distribution, to maintain the price line."
13. In Chandra Bhavan Boarding and Lodging, Bangalore Vs. State of Mysore (1970-II-LLJ 403 at p. 409), the Supreme Court while affirming the Judgment of the Division Bench of this Court on the validity of the Notification under Section 5 of the Act observed as follows at page 409 "We have earlier noticed the circumstances under which the Act came to be enacted. Its main object is to prevent sweated labour as well as exploitation of unorganised labour. It proceeds on the basis that it is the duty of the State to see that at least minimum wages are paid to the employees irrespective of the capacity of the industry or unit to pay the same. The mandate of Article 43 of the Constitution is that the State should endeavour to secure by suitable legislation or economic organisation or in any other way, to all workers agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. The fixing of minimum wages is just the first step in that direction. In course of time the State has to take many more steps to implement that mandate. As seen earlier that resolution of the Geneva Convention of 1928 which had been accepted by this country called upon the convenanting States to fix minimum wages for the employees in employments where the labour is unorganized or where the wages paid are low. Minimum wage does not mean wage just sufficient for bare sustenance. At present the conception of a minimum wage is a wage which is somewhat intermediate to a wage which is just sufficient for bare sustenance and a fair wage. That concept includes not only the wage sufficient to meet the bare sustenance of an employee and his family. It also includes expenses necessary for his other primary needs such as medical expenses, expenses to meet some education for his children, and in some cases transport charges etc - See U. Unichoyi Vs. State of Kerala, supra. The concept of minimum wage is likely to undergo a change with the growth of our economy and with the change in the change in the standard of living. It is not a static concept. It concomitants must necessarily increase with the progress of the society. It is likely to differ from place to place and from industry to industry. That is clear from the provisions of the Act itself and is inherent in the very concept."
14. The last case on the point which requires to be noticed is Hydro Engineer Pvt. Ltd. Vs. Workmen (1969-I-LLJ-713 at pp 716-717). The point that came up for consideration was whether the Tribunal fixed a consolidated minimum wages or fair wages. The Supreme Court observed :-
"......... It is thus clear that the concept of minimum wages does take in the factor of the prevailing cost of essential commodities whenever such minimum wage is to be fixed. The idea of fixing such wage in the light of cost of living at a particular juncture of time and of neutralizing the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index cannot, therefore, be said to be alien to the concept of a minimum wage. Furthermore, in the light of spiralling of prices in recent years, if the wage scale are to be realistic, it may become necessary to fix them so as to neutralize at least partly the price rise in essential commodities. Indeed, when the Bilgrami award revised the wage-scales, it took, as aforesaid, into account the rise in the cost of living index and neutralized that rise by approximately raising them by 1 n.p. for every point in the rise though it declined to join up the scales with the index of cost of living."
15. This observation of the Supreme Court is of special significance to the facts of this case since while upholding the award of the Industrial Tribunal, the Supreme Court did make an observation about the relevancy of basic wage to meet the rise in the cost of living. On this reasoning, is it possible to contend as the learned Counsel for Petitioners have done in this case that in ASPINWAL the parties had proceeded on the basis that the basic wages were fixed in all the petitioners' industries taking into consideration 600 points as the C.P.I. and any D.A. that could have been notified by the State Government for the fixation of the minimum wage was only when the C.P.I. exceeded 600 points and not 470 points ? I have already referred to the basic wages prevalent in these industries in the earlier part of my Judgment. In the impugned Notifications and the earlier Notifications of 1982 and 1984 I am unable to comprehend any definite pattern the Government had in view while fixing the basic wages. A specific question was put to Mr. P. K. Kurien, the learned Counsel who advanced the leading arguments in this case. His answer was that basic wages were fixed on an adhoc basis. That only shows that this Court should proceed on the basis that the basic wages fixed in all these industries did not take into consideration the cost of living as on the date of impugned Notifications and that is the very reason, to make up the deficiency in the basic wages which could also absorb a certain portion of the cost of living the Government brought down the D.A. base to 470 CPI in order to partially off-set the deficiency in the basic wages. That the Government had this aspect of the case in view is also clear from the proceeding before the Advisory Board. In the proceedings of the Advisory Board dated 11/12th December, 1985 one of the independent members had observed as follows :
"Smt. Bibijan stated the draft notification was issued by the Government on 27th July, 1981 calling for objections and suggestions of the concerned. After considering all the aspects, final notification was issued on 24th February, 1982. In this notification the C.P.I. base was taken as 470 points, which was then latest available figure in the State. This notification was challenged in the High Court. Then the Second notification was issued on 5th June, 1984 in consulation with reconstituted Advisory Board in this regard.
In this notification, the C.P.I. figure has been taken as 600 points which was perhaps the latest figure available in the State for that period. The minimum wages payable was retained in this notification with slight modification. In between these two there is a difference of 130 points for which due weightage has not been given or the rates of basic wages enhanced. In normal course, this increase should have been treated either as Fixed D.A., or merged with the minimum wages fixed. And any increase over and above 600 points should have been taken as variable Dearness Allowance. However this notification was also challenged in a number of Writ Petitions before the Hon'ble High Court and the same has been partially upheld with a direction to Government to re-consider and refix the rates of D.A. Government has now prepared the draft notification and the same has been placed before the Advisory Board. In this proposed notification the CPI base has been reduced to 470 from 600 points. Normally the base has gone up. 600 points to 470 may amount to revision of higher rate of minimum wages. If number of points is fixed over and baove this, it may result in more than 100 per cent neutralisation which is in contravention of Section 41(1) of Minimum Wages Act. Further she said that no objection seems to have been made in any Writ Petitions on the base 600 points and even High Court did not seem to have made any observation on this part. She stressed the members as to why this 600 points has been reduced to 470. This has to be looked into."
16. This member is a retired Deputy Labour Commissioner and seems to be fairly conversant with the mechanics of fixation of minimum wages having worked in the Labour Department for a number of years. She had brought out both the employees' and the employers' views on the fixation of the minimum wage in the light of the Judgment of this Court in ASPINWAL and other earlier cases. On the side of the workmen, she had observed that the increase in the CPI index i.e. 600-470 = 130 since the year 1984 to 1986 should be absorbed by an increase in the basic wage. So, this discussion amongst the members of the Advisory Board was before the State Government, when it issued the final notification. What was in the mind of the Government before it made the impugned notifications is also clear from the letter dated 18th November, 1985 issued by the Secretary to the Government, Labour Department to the Secretary of the Minimum Wages Advisory Board. It reads :
To The Secretary, Karnataka State Minimum Wages Advisory Board, Bangalore-2.
Sir, Sub : Karnataka State Minimum Wages Advisory Board - Proceedings of the first meeting, of the reconstituted Board - clarification Ref : Your letter No. MWA/CR-44(8)/85-86 dated 12th November, 1985.
With reference to the above, I am directed to state that in the draft notifications now proposed C.P.I. number 470 has been taken as the base for the reason that this was the prevailing C.P.I. number when the revision of minimum wages was first proposed in the year 1981. In most cases, while finalising the minimum wages in the notifications issued in 1984, no provision has been made for the increase in C.P.I. numbers which have taken place between 1981 and 1984 in fixing the basic wage. In the present drafts, it will be seen that there is no basic wage which is as low as Rs. 8.00 or 9.00. Considering the C.I.P. base of 470 and the minimum wages of Rs. 9.50, neutralisation of 2 paise per point may be quite in conformity with the High Court's decision. It will be seen that Rs. 9.50 is the minimum wage most commonly fixed for the slab of Rs. 10.00 or less per day.
As regards the second issue of raising the basic wage based on the proposed V.D.A. of 2 paise per point, this question does not seem to arise since the Court Order does not affect the basic wage except in three employments for which an appropriate revision in basic wage has been proposed."
This letter discloses that the State Government had in view of the fact that there was not revision of basic wage since 1981 inspite of the increase in the cost of living. If 470 CPI base in the year 1981 was 600 CPI base in the year 1984, for the years 1981 to 1986 there should have been a corresponding increase in rate of basic wages. In the circumstances, it can be said and it is also clear from the proceedings of the Advisory Board and the letter from the State Government dated 18th November, 1985 that when they linked the D.A. to 470 CPI base in the impugned notifications, they had in view that the basic wages had remained static for more than 4 years in most of the industries.
17. That takes me to the next question whether the impugned notifications are in direct contravention of the directions made by this Court in ASPINWAL. The question will have to be considered after noting the findings of this Court on the method of neutralisation that this Court wanted the Government to adopt while re-doing the notification. The arguments advanced by the industries and the workmen on the percentage of neutralisation fixed in the 1984 notification were based on entirely two different concepts of neutralisation. The neutralisation pattern which commended itself to this Court and as put forth by the employers does not take into consideration the correctness or otherwise of the neutralisation pattern put forth the workmen based on the LIC method. In para-16 of the Judgment in ASPINWAL this Court dealt with the contentions of the employers that the rate of D.A. fixed in the 1984 notifications amounted to 300% neutralisation. The calculation in that behalf was made on the following basis :
The rate of wages at 600 CPI points was taken at Rs. 10/- per day that is to say, the basic wage was fixed at Rs. 10/- per day on the hypothesis that would be equivalent to cost of living at 600/- CPI. This was divided by 600 points and accordingly, the rate of wage per point per day came to 1.66 ps. The increase provided in the impugned notifications in ASPINWAL was 0.25 ps. for every increase of 5 points in CPI Index per day and accordingly this Court came to the conclusion that at 5 paise per day on every 5 points increase, the percentage of neutralisation would be 300% ie., 5 paise - 1.66 = 3.34 paise and that will be nearly 300% of 1.66 paise per point. As against this calculation the workers have put forth the calculation based on the L.I.C. pattern. That is as follows :-
"The Consumers Price Index Number is arrived at by LASPEYRES' Formula :
CPI No. Cost of Goods of the Consumer Base 1960- basket on current date 100 ------------------------------- x 100 Cost of goods of the same baskets in 1960
Example : If the cost of an article today is Rs. 1,000/- let us say that the same article was priced at Rs. 250 in 1960.
Then to-day, the said article is 4 times costlier than in 1960, i.e. 1000
----- = 4 times or 250 in terms of percentage, it is 400% which is the CPI Number in relation to 1960 price expressed as 100.
The increase in the price of the article since 1960 is Rs. 750/-
or in terms of percentage it is 300% increase, that is 400-100.1000 CPI No. = ------- x 100 = 400 250
Increase is 400-100 (1960 Base) = 300% 300% increase of Rs. 250/- i.e., Rs. 750 increase or Rs. 2.50 percent increase which is 100 percent Neutralisation, i.e., For a wage of Rs. 250/- if for every point increase of Rs. 2.50 or 1 percent of Rs. 250/- is added, 100 percent neutralisation is achieved. The same principle is adopted in Life Insurance Corporation of India to provide 100 percent neutralisation to its employees.
For the first time the concept of 100% neutralisation to neutralise the rise in cost of living came into operation in LIC (Life Insurance Corporation of India) and Commercial Banks, as a result of several Bipartite Settlements. The basis adopted for the purpose of determining the rate of neutralisation was that increase in the Consumer Price Index Number on All India level computed on the base 1960 = 100, had been taken into account. In the settlements between the Unions in LIC and the Management, it was agreed to provide 100 percent neutralisation to Class IV employees and it is defined that 100 percent neutralisation is achieved when for every slab of 4 points increase in Consumer Price Index Number, the Dearness Allowance equivalent to 4 percent of the pay is given to the Class IV employees."
18. Thus there were two different modes of working out the neutralisation factor. Though, in may view, the patterns adopted by the LIC for working out the neutralisation factor appears to be based on the principles laid down by the Supreme Court in Ahmedabad Mill Owners' Association case supra it is unnecessary to go into the controversy in this case since the percentage of neutralisation, in my view, will not be more than 100%, if this Court is satisfied that 470 CPI should be taken into consideration along with basic wage which remained unchanged for a period of four years. If that be so, the next point for consideration would be whether ASPINWAL had stayed the hands of the State Government while directing it to re-do the notification by working out the percentage of neutralisation in the manner suggested by the petitioners and accepted as correct. No finding was given in ASPINWAL on the relative merits of the neutralisation formula suggested by both the parties. A reading of the entire Judgment in ASPINWAL does not indicate that the method of neutralisation as proposed by the workmen is not in accordance with law. In the circumstances, it is not possible for the petitioners to contend that there was a binding precedent on the method of neutralisation and therefore, the impugned notification is bad because, the State Government did not comply with the directions made by this Court. The State Government also had in view the decision of this Court in ASPINWAL as could be made out in the letter dated 18th November, 1985 the relevant portion of which I have already excerpted above.
19. In the pleadings of the petitioners I find that the industry had represented to State Government the need for keeping the base at 600 CPI in the light of the directions made by this Court. In Annexure 'K' filed by Cinema Industry they have stated as follows :
"The arguments of the Trade Unions may be that 470 points had been proposed in the notification. However, while issuing the final notification the State Government has fixed the base points at 600. Therefore, it is no argument to say that 470 should be the base point. In fact, as state above, the High Court of Karnataka has confirmed the basic wage and base points at 600 and there is no scope of altering the base point at this stage. If the base point is to be altered then basic wage also should be reduced and fixed at Rs. 5/- or Rs. 6/-."
This representation on behalf of the Film Industry may hold good in so far as it relates to the base point 600 CPI. But it is not correct for the Cinema Industry to say in its representation that this Court had confirmed the basic wage. The question what should be the basic wage in the Cinema Industry had never come up for consideration before this Court nor there is a finding about the correctness of basic wage fixed by the Industry. But in the operative portion of the order, this Court keeping in view the provisions of Section 4 of the Act gave certain directions to the State Government to revise the minimum wage in the light of the observations made by it. In the circumstances the petitioners are under a misconception to contend that this Court had given a definite finding that the basic wage fixed in this industry was also in conformity with the Act. In the absence of any such finding, it was open to the State Government to keep in view the no-change in the basic wage since 1984 while making the impugned notification in the year 1986. Even in the grounds raised in the Writ Petitions, the petitioners have not contended that the State Government had ignored the directions made by this Court regarding the basic wages fixed in 1984 notifications. That only shows that this Court was only concerned with the rate of neutralisation over 600 CPI and was not concerned with basic wage which was essentially an integral part of the minimum wage. These observations hold good for other industries in the connected Writ Petitions.
20. Mr. Ullal, learned Counsel appearing for the printing industry has taken certain serious objections to the manner in which the impugned notifications were made. He invited my attention to page 698 of the Judgment of this Court in ASPINWAL and to certain other portions and submitted that in ASPINWAL the grievance of the employees was not only regarding ceiling on Dearness Allowance but also about the effective date of enforcement of the notification and the rates of wages. He submitted that the decision of this Court in ASPINWAL had become final since the appeal was admitted only on a very limited point and therefore that decision operates as resjudicata between the parties. According to him, D.A. linked to 470 CPI base in the impugned notification touching the printing industry is contrary to the decision of this Court in ASPINWAL; that the decision in ASPINWAL was binding on the Government as the Government was a party to the proceedings before this Court. He relied on the decisions of the Supreme Court reported in Mohanlal Goenka Vs. Benoy Kishna Mukherjee , Mysore State Road Transport Corporation Vs. Babajan Conductor & Another (1977-LLJ-425) & The Virudhunagar Steel Rolling Mills Ltd. vs. Government in support of his contentions. According to him, the bar of res-judicata applies to writ proceedings, since writ proceedings before this Court are governed by the Rules framed by this Court in that behalf and those Rules make the provisions of C.P.C. applicable to the said proceedings. He also submitted that if this Court were to take a view which is different from that in ASPINWAL the matter has to go before the Division Bench.
21. I will consider these contentions of Sri Ullal since a question of judicial propriety has been raised by him on the ground that the decision in ASPINWAL has decided finally not only the rate of D.A. but also the basic wages in all the concerned industries. In Mohanlal Goenka Vs. Benoy Kishna Mukherjee and others, supra the Supreme Court was dealing with a matter arising directly under the provisions of Civil Procedure Code. In that case, the Supreme Court observed that it is no longer in doubt that the principle of constructive res-judicata is applicable to execution proceedings and held that even an erroneous decision on a question of law operates as res-judicata between the parties to it; that the correctness or otherwise of a judicial decision has no bearing upon the question whether or not it operates as res-judicata and therefore a decision in the previous execution case between the parties holding that the matter was not within the competence of the executing Court even though erroneous, was binding on the parties. In M. S. R. T. C. Vs. Babajan Conductor and another, supra the declaratory relief asked for by the first respondent against the Corporation in the earlier petition had not been granted. Therefore the Supreme Court found in the subsequent Writ Petition that that relief was deemed to have been refused. The first respondent in the earlier Petition did not himself go up in appeal against that decision. Accordingly, it was held by the Supreme Court that he could not claim such a relief in the subsequent Writ Petition.
Mr. Ullal also relied on the decision of the Supreme Court in the Virudhunagar Steel Rolling Mills Ltd. Vs. The Government of Madras supra. In that case a Writ petition was dismissed under Article 226 of the Constitution by the High Court on merits by making a speaking order. The Supreme Court held that that order will operate as res-judicata in a subsequent proceeding under Article 32 of the Constitution even if no notice was issued to the other side before such dismissal. The Supreme Court observed that the only remedy in such a case was to come up in appeal from the speaking order passed on merits. In Daryao and Others Vs. State of U. P. and Others , the Supreme Court considered the applicability of Section 11 of C.P.C. to proceedings under Article 226 of the Constitution and observed as follows :
"The argument that res-judicata is a technical rule and as such is irrelevant in dealing with petitions under Article 32 cannot be accepted. The rule of res-judicata as indicated in Section 11 of the Code of Civil Procedure has no doubt some technical aspects, for instance the rule of constructive res judicata may be said to be technical; but the basis on which the said rule rests is founded on considerations of public policy. It is in the interest of the public at large that a finality should attach to the binding decisions pronounced by Court of competent jurisdiction, and it is also in the public interest that individuals should not be vexed twice over with the same kind of litigation. If these two principles form the foundation of the general rule of res-judicata they cannot be treated as irrelevant or inadmissible even in dealing with fundamental rights in petitions filed under Article 32.
The binding character of judgments pronounced by Courts of competent jurisdiction is itself an essential part of the rule of law, and the rule of law obviously is the basis of the administration of justice on which the Constitution lays so much emphasis. On general considerations of public policy there seems to be no reason why the rule of res-judicata should be treated as inadmissible or irrelevant in dealing with petitions filed under Article 32 of the Constitution. It is true that the general rule can be invoked only in cases where a dispute between the parties has been referred to a Court of competent jurisdiction, there has been a contest between the parties before the Court, a fair opportunity has been given to both of them to prove their case, and at the end the Court has pronounced its judgment or decision. Such a decision pronounced by a Court of competent jurisdiction is binding between the parties unless it is modified or reversed by adopting a procedure prescribed by the Constitution. and and (S) . Ref. to.
It makes no difference to application of the rule of res-judicata that the decision on which the plea of res-judicata is raised is a decision not of Supreme Court but of a High Court exercising its jurisdiction under Article 226. It is doubtful if the technical requirement prescribed by Section 11 as to the competence of the first Court to try the subsequent suit is an essential part of the general rule of res-judicata; but assuming that it is, in substance even the said test is satisfied because the jurisdiction of the High Court in dealing with a Writ Petition filed under Article 226 is substantially the same as the jurisdiction of this Court in entertaining an application under Article 32. Article 226 confers jurisdiction on the High Court to entertain a suitable Writ Petition, whereas Article 32 provides for moving this Court for a similar Writ Petition for the same purpose. Therefore, the argument that a petition under Article 32 cannot be entertained by a High Court under Article 226 is without any substance, and so the plea that the judgment of the High Court cannot be treated as res-judicata on the ground that it cannot entertain a petition under Article 32 must be rejected."
Mr. Ullal also strongly relied on the decision of the Supreme Court in Bhopalsugar Industries Ltd. vs. Income Tax Officer, Bhopal . In that case though the Income-Tax Officer had declined to carry out certain directions given by the Appellate Tribunal the High Court refused to issue a Writ in the nature of mandamus on the ground that there was no manifest injustice in the order of the Income-Tax Officer. Referring the decision of the High Court, the Supreme Court observed :
"We think that the Learned Judicial Commissioner was clearly in error in holding that no manifest injustice resulted from the order of the respondent conveyed in his letter dated March 24, 1955. By that order the respondent virtually refused to carry out the directions which a superior tribunal had given to him in exercise of its appellate powers in respect of an order of assessment made by him. Such a refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of Courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the Learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior tribunal, yet held that no manifest injustice resulted from such refusal."
In Sharma D. P. vs. Karnataka State Transport Authority And Others 1985 (2) K.L.J. 16 the Division Bench ruled that the opinion expressed by the third Judge on a point of law has to be accepted :
"The opinion expressed by the Learned Third Judge on the point of law has to be accepted because it becomes an opinion of the majority. Whereas the opinion expressed by the Learned Third Judge on the questions on which either there is no opinion or much less a different opinion expressed by one of the judges composing the Division Bench, is not final and conclusive, as is clear from Section 98(2) C.P.C. The words "the judges composing the Bench different in opinion on a point of law, they may state the point of law upon which they differ and the appeal shall then be heard upon that point only by one or more of the other Judges" in Section 98(2) C.P.C., makes it clear that a reference to the third Judge is permissible only on a difference on a point of law and accordingly, the third judge can adjudicate only the point of law upon which there is difference of opinion before the two judges. In other words, it is not open to the third Judge to adjudicate upon the point of law upon which there is a difference of opinion before the two judges unless the point is closely connected to, or arises out of, the point of law on which there is difference of opinion before the two judges and that point is referred to a third Judge. Thus, the reference to a third Judge is permissible only on a difference on a point of law. The opinion of the third Judge on such point of law is conclusive, as his opinion becomes the opinion of the majority. In the instant case, the Learned Judges, who composed the Division Bench, having differed on the nature and extent of exclusion of the private operators contemplated by Anna Transport Scheme in question, the opinion of the Learned Third Judge, which concurs with the opinion expressed by the Chief Justice, becomes an opinion of the majority."
Relying on these decisions Mr. Ullal urged this Court to issue a direction to the State Government to give effect to the decision of this Court in ASPINWAL on the ground that the impugned notifications made by the Government ignoring the directions made by this Court would amount to denial of justice to the petitioners and would also be opposed to the rule of law.
There is no doubt that the proceedings under Article 226 of the Constitution are also governed by the technical pleas of constructive Res-judicata. If a particular point had been debated before this Court by the parties and a decision is rendered thereon by this Court and if that decision become final then the parties to those proceedings are bound by the decision. The argument of the Learned Counsel Mr. Ullal has to be tested by the directions made by Rama Jois. J., in ASPINWAL. Mr. Ullal contended that the only point that was left open for the State Government was to fix the rate of D.A. by the linking it to 600 CPI. base as suggested by the management before Rama Jois, J. The startling and inequitable result of such an argument should be demonstrated by taking the case of a Sweeper in the Cinema Industry.
The minimum wages of a sweeper in Zone I in 1978 was Rs. 180/- per month. In the 1981 proposal, the minimum wage was increased to Rs. 397.55 per month plus D.A. linked to 470 CPI. In the year 1982 as per 1982 notification the minimum was Rs. 397.55 (consolidated wage). In the year 1984, the basic wage was fixed at Rs. 300/- per month and D.A. on the difference between 470 CPI and 561 CPI. i.e., 91 points. In the 1986 impugned notification, the basic wage is fixed at Rs. 10/- per day or Rs. 300/- per month and D.A. on the difference of 150 points (620-470) and if the arguments of the Learned Counsel Mr. Ullal were to be accepted, the minimum wage for Sweeper-cum-Office Boy in a cinema Theatre would come to Rs. 300 + 0.02P per point day over and above 600 points as D.A. That will come to Rs. 300 + Rs. 12 = Rs. 312/-. The workman would be entitled to an increase of Rs. 12/- in his total pay over a period of 5 years.
22. Though the 1982 and 1984 notifications were quashed by this Court, what should be the basic wage did not arise for consideration in the earlier two rounds of litigation. The minimum wage of the Sweeper as early as in 1982 was sought to be fixed at more than Rs. 13.25 paise per day, and hence by no stretch of imagination it can be said that due regard being had to abnormal increase from 1982 to 1986 in the cost of living, the employee would be entitled to only Rs. 12/- as D.A. to neutralise the increase in the cost of living over a period of 4 years. If this illustration is kept in view, I have no hesitation in coming to the conclusion that the learned Judge in ASPINWAL did not give any such direction to the State Government to fix the D.A. base by ignoring the fact that basic wage had remained static over a period of nearly 5 years. In the circumstances the arguments based on the plea of res-judicata and Judicial propriety must necessarily fail because there is no direction by the learned Judge is ASPINWAL that the basic rate of wages should be fixed in all the industries without taking into consideration the rise in the CPI index over a period of 5 years. Therefore, it is futile to contend that the Judgment in ASPINWAL operates as res-judicata and any violation of the observation of the learned Judge would amount to gross disobedience of the order of this Court.
As noticed earlier, without going into the correctness of the neutralisation formula which was accepted by this Court in ASPINWAL, the formula based on the observations of the the Supreme Court in Ahmedabad Mill Owners' case appears to be more scientific and is in tune with the concept of D.A. taking 1960 base = 100 CPI.
23. In the circumstances to hold that there was a complete embargo on the Government for revising the basic wage or the D.A. except in the manner approved in ASPINWAL would result in fixing a minimum wage which was not suggested by this Court by formulating a definite principle. As noticed earlier the parties were not at issue on what should be the basic wage or the minimum wage in those industries. What was challenged was the rate of D.A. provided for in the 1984 notification on the ground that it exceeded 100 per cent neutralisation. On that limited point this Court came to the conclusion that the percentage neutralisation in the impugned 1984 notifications would work out to 300 per cent which was contrary to the observations made by the Supreme Court in a number of cases. The Supreme Court limited the neutralisation to 100% on the ground anything beyond 100 per cent would aggravate the inflationary trends in our economy. That was a passing observation made by the Supreme Court with the hope that this inflationary trend would be brought under control by the Government by taking very strong fiscal measures. It would be a matter for the Supreme Court and this Court in an appropriate case to consider whether the Government should strictly adhere to the norm of 100% neutralisation at the lowest level of wages when there are various other factors including black money which are responsible for inflation. In the circumstances, I am unable to agree with the contention of Mr. Ullal that the impugned notification in the Printing Industry is contrary to the Judgment of this Court or that the matter should go before a larger Bench to consider the correctness of the decision rendered in ASPINWAL. In my view the discussions before the learned Judge and the operative portion of the order of the learned Judge itself make it clear that the basic wages to the various categories of workmen in the Petitioners' Industries did not come up for consideration and therefore that question was not answered by this Court in that case.
24. In the earlier batch of Writ Petitions before me similar contention was raised by the learned Advocate General that in the light of the decision of the Supreme Court in Chandrabavan Boarding case reported in Chandra Bhavan Vs. State of Mysore supra, the decision of this Court reported in AIR 1968 Mysore 156 and the decision of the Supreme Court in The State of A. P. Vs. Narayanavelur Beedi Manufacturing Factory & Others (1973-I-LLJ-476) it was not open to this Court to examine the validity of the 1982 notifications with reference to the composition of the Advisory Board. This contention was rejected by me and the reasons given by me in para-48 of my Judgment quashing the 1982 notifications would apply with full force to the facts of these cases and for the very same reasons I am unable to accept the arguments of the Learned Counsel that ASPINWAL operates as a binding precedent on this Court and the matter has to go before the Division Bench of this Court. What I observed was :
"On the matrix of these undisputed facts, what is the ratio decidendi of these cases ? "Cases do not unfold the principles for the asking." (Cardozo, J.). If the line or reasoning can be discovered in a judgment, it is binding. It is imperative for this Court, keeping in view the command of Article 141 of the Constitution to ascertain the rules for finding the principles of a case which would be a binding precedent. The rules as formulated by Professor Goodhart, the erudite Ex-editor of Law Quarterly Review, in my view, afford a good guidance in this regard and they are :
"(1) The principle of a case is not found in the reasons given in the opinion.
(2) The principle is not found in the rule of law set forth in the opinion.
(3) The principle is not necessarily found by a consideration of all the ascertainable facts of the case, and the judge's decision.
(4) The principle of the case is found by taking into account
(b) of the facts treated by the judge as material, and
(b) his decision as based on them.
(5) In finding the principle it is also necessary to establish what facts were held to be material by the judge, for the principle may depend as much on exclusion as it does on inclusion ..."
Since I have taken the view that ASPINWAL was not at all concerned with the fixation of basic wage under Section 4(1) of the Act if 600 CPI is kept as the base point, the Judgment in ASPINWAL does not operate as a binding precedent and therefore I am satisfied with respect to Rama Jois, J., for whose views I have the greatest respect that I am not committing any judicial impropriety by not referring this matter to the Division Bench.
25. The petitioners in the film industry have not taken up the contention in the Writ Petition that this Court had fixed the basic wages in ASPINWAL. I have been taken through the grounds taken by the petitioners in the film industry. In ground No. 32 what they say is that if a base point is reduced to 470 the neutralisation will work out to more than 750% under the impugned notification. The view that I have taken is further supported by the observations made by the Learned Judge in ASPINWAL on the special points raised by the various industries. On the special point raised by the tailoring industry this Court had quashed the rate of minimum wages fixed in the tailoring industry as irrational and arbitrary. In the hotel, coffee curing and coffee plantation industries the grievance of the petitioners was that the fixation of the wages was arbitrary and irrational for the various categories in question. Even in the special points urged by the petitioners in these industries no question relating to the fixation of basic rate of wages for fixing a minimum wage was raised either by the workers or by the employers keeping in view Section 4(1) of the Act. I have been taken through the Judgment in ASPINWAL over and again by the Learned Counsel for the petitioners and I am satisfied that the Learned Judge did not give any ruling on the quantum of basic wage that was necessary for a proper fixation of the minimum wage. In the circumstances, it could not be said that the impugned notifications are in flagrant violation of the direction made by this Court in ASPINWAL and consequently it follows that the challenge to impugned notification based on the ground of arbitrariness under Article 14 must also fail.
26. The other contentions based on the fundamental right to carry on business under Article 19(1)(g) of the Constitution does not merit consideration since it is well settled that the capacity of the industry to meet the increased wage bill consequent upon the revision of minimum wages is of no consequence for deciding the validity of the impugned notifications.
27. Mr. Holla, the Learned Counsel for the hotel industry was at pains to point out that the impugned notification in the hotel industry would very badly hit the small time operators in that industry. He is justified in contending that these hoteliers cannot be compared to other hoteliers operating under the label of 3, 4 or 5 stars, but the law is well settled. If these small time operators are hit by the impugned notification, they will have to find-out other suitable avenues of business instead of depending on sweated labour or mitigate the hardship felt by them by making the workers participants in the management of the business and thereby reducing the financial burden of the employer
28. One more ground which disentitles the petitioner from any relief in these proceedings is that the Act is a beneficial piece of social legislation which protects the day-to-day living condition of the workers employed at the lowest level of wages in sweated labour. Though the minimum wages are fixed statutorily, it does not measure up either to the fair wage or to the living wage. This Court should also take into consideration the C.P.I. index which has gone up from 470 in the year 1982 to 620 in the year 1986. The workers had a long run of litigation since 1982 in obtaining this minimum wage under the impugned notification since as noticed earlier, the two notifications made in the year 1982 and 1984 were successfully challenged by the petitioners. Therefore, any interference on grounds which are not really substantial would be repugnant to the entire object of the purpose of the Act and opposed to well settled principles of exercising the extraordinary jurisdiction under Article 226 of the Constitution.
As observed by the Supreme Court in Ministry of Labour & Rehabilitation Vs. Tiffin's Barytes Asbestos and Paints Ltd; & Government of India Vs. M/s. Barium Chemicals Ltd. (1985-II-LLJ-412) the notifications fixing minimum wages are not to be lightly interfered with under Article 226 on the ground of some irregularities in the constitutions of the committee or in the procedure adopted by the committee. A notification fixing minimum wages in a country where wages are already minimal should not be interfered with under Article 226 except on the most substantial grounds. The legislation is a social welfare legislation undertaken to further the Directive Principles of State Policy and action taken pursuant to it cannot be struck down on mere technicalities.
Though the above decision of Supreme Court was rendered on the question relating to the composition of the Advisory Board under Section 9 of the Act, the circumstances under which the extraordinary jurisdiction under Article 226 of the Constitution could be exercised have been explained by the Supreme Court in the aforesaid decision.
29. I have also kept in view the decision of the Supreme Court in Kamani Metals & Alloys Ltd. Vs. Their Workmen supra where the Supreme Court has ruled that in the fixation of either a minimum wage, fair wage or a living wage, the worker is entitled to a proper share of national income with a view to improve their standard of living.
Mr. Narasimhan, the learned Counsel in the return on behalf of the workmen has filed a tabular statement giving the State per-capita income for the years 1980-81 to 1985-86. The workmen have extracted these figures pertaining to the State income from 1980-81 to 1985-86 from the Economic Survey conducted by the Planning Department, Government of Karnataka, which was placed before the State Legislature at the time of presentation of budget. For the year 1980-81 the total income in crores was Rs. 5341.54 put per capita income was Rs. 1,453.47; for the year 1981-82 the total State income in crores was Rs. 6,195.39 and per capital income was Rs. 1,643.87, for the year 1982-83, the total State income in crores was Rs. 6,489.07 and per Capita income was Rs. 1,679.07; for the year 1983-84 the total State income in crores was Rs. 7,776.67 and per capita income was Rs. 1,960.20; for the year 1984-85 the total State income in crores was Rs. 8,363.66 and per capita income was Rs. 2,046.53 and for the year 1985-86 the total State income in crores was Rs. 8,629.21 and per capita income was Rs. 2,055.71. So, over the period 80-81 to 85-86 there was an increase of nearly 75 percent in the total income of the State and per capita income has also increased by more than 60 percent. The workers must receive a share in the increase in the national income as observed by the Supreme Court in Kamani Metals and Alloys Ltd. supra. It is not the case of the petitioners nor is it established before me that the impugned notification would drive the capital from the petitioners' industries to other industries creating unemployment for the workmen. Their only grievance is that they are burdened with financial liability which they cannot meet.
30. In my view, the only substantial ground that could have been raised by the petitioners in these cases is that under the impugned notifications the Government had fixed not a minimum wage but a fair wage. But that is not the plea of the petitioners in these petitions. That apart, they have not placed any material to show that what was fixed by the Government would be approximately a fair wage.
31. Further, in order to satisfy myself whether the increase in the minimum wages would unconscionably burden the petitioners' financial position, I have called upon them to furnish the figures relating to the percentage of wages in the cost of one consumable unit in the respective industry. No figures have been produced before me obviously because those figures may not advance the case of the petitioners.
32. The next point for consideration is the case of cooks and assistant cooks employed in the hotels who have challenged the impugned notification in the hotel industry in so far as it relates to reduction in their basic wages. The basic wage in the year 1981 was Rs. 370/- linked to 470 CPI base. But in the 1982 notification a sum of Rs. 370/- as consolidated wages was fixed as minimum wage. In 1984 a sum of Rs. 500/- was fixed as basic wage linked to D.A. base 600 CPI. However, in 1986 the Government brought down the basic wage to Rs. 425/- and at the same time reduced the D.A. base to 470 CPI. Mr. Swethadri, Learned Counsel for workmen has made a grievance about the reduction in the basic wage. The basic wage had been reduced by nearly Rs. 75 in the year 1986. But as noticed earlier while considering the case of the employers' I did not find a rational basis on the part of the Government to fix the basic wage over the years 1981 to 1985. In my view Rs. 500/- was fixed in 1984 on an adhoc basis. Therefore the decision of the Government in the impugned notification to bring down the basic wage cannot be said to be arbitrary and irrational since the same is made good by more D.A. linked to 470 CPI.
33. Though the State Government has not filed its return in this case, it has entered appearance through the Learned Government Advocate and placed the necessary record before me. In the written arguments submitted by it, it has justified the validity of the impugned notifications. It has taken the stand that the draft notifications were issued in the year 1981 and in the normal course the minimum wages under the Act would have come into force with immediate effect. But the fixation of revised wages was delayed or deferred due to litigation since the year 1982. The wages proposed in 1981 notifications were not related to the cost of living figures in that those wages could not reflect the needs of the worker in the year 1986. Its further contention is that the direction of this Court in ASPINWAL had given it an opportunity to set right the anamolies.
Though the State Government has contended in its written arguments that the fixation of 600 CPI base in 1984 was an aberration and the same had been set right now, it is not proper for this Court to accept that contention as an aberration as the State Government was a party to the proceedings before this Court in ASPINWAL and the Learned Advocate General had submitted that the State Government would set right whatever anomaly or deficiency that may be pointed out by this Court.
34. Mr. Holla has invited my attention to the impugned notification in the Hotel industry in so far as it relates to the deductions made towards the value of food supplied by the hoteliers to their workmen. Though there is a provision under Section 4(1)(iii) of the Act for taking into consideration the cash value of the concessions, if any, while fixing the minimum wage the deduction for the food supplied by the hoteliers will come under Rule 21(2)(2)(V) of the Rules which provides for deductions at such rates as fixed by the State Government by a General or Special Order. The grievance of the hoteliers is that the amount of deductions in the impugned notification is not commensurate with the actual value of the food supplied to the workers who are given free breakfast, lunch and dinner. So, at the present market rate, according to them, the food value should be Rs. 240/- per month. As observed by the Supreme Court in Chandrabhavan Boarding case, supra, food supplied is an amenity and it is open to the hoteliers to discontinue this amenity and strictly follow the provisions of Section 4(1)(iii) of the Act.
Dealing with this point the Division Bench in Chandrabhavan Boarding and Lodging and Ors. Vs. State of Mysore by its Secretary, Department of Labour and Municipal Administration, Bangalore and Others supra has observed thus :-
"We think the State is right in contending that the quantity, quality and value of food supplied by the employers to employees are not uniform and vary from establishment to establishment and that is not possible to value separately food supplied to employees in each individual establishment. Government can only fix uniform rates for the value of food supplied in different zones, for the purpose of deduction from minimum wages. Hence, the question is whether the value fixed by the Government is unreasonably low. In the representation sent by the all Mysore Hotels Association to the proposal to fix minimum rates of wages, the employers had suggested that the value of food should be fixed at Rs. 45 per month for Zone 'A' and Rs. 40 per month for Zone 'C'. Thus it is seen that the rates fixed towards the value of foods in the note for three Zones are not very much different from those suggested by a representative body of the proprietors of hotels and eating houses in the State. There is considerable force in the contention of the State that generally the quality of food that is supplied to employees is not the same as that supplied to customers in hotel and eating houses. In the circumstances we are unable to hold that the value fixed in the note for food supplied to employees in different zones, is unreasonably low or arbitrary or whimsical."
35. If the contention of the learned Counsel for petitioners were to be accepted it would be open to the workers to make a claim for higher wages on the ground that the present wage does not reflect correctly their minimum requirements. This argument will be counter productive and it will not in any way help either the interests of the hoteliers or the interest of the workers, and therefore, it is not proper to interfere with the value of food supplies as fixed by the State Government under Rule 21 of the Rules.
For these reasons these petitions fail and they are dismissed.
36. Though I have upheld the validity of the impugned notifications, I must record a word of caution to prevent future squabbles between the parties on the vexed question of neutralisation. That is there is a need for revision of the CPI index.
"The International Conference of Labour Statisticians has recommended that weighting diagrams of cost of living index numbers should be revised at least once in ten years on the basis of the fresh family budget enquiries. By this standard, every one of the series included in all-India cost of living index is out-moded and requires to be replaced. The centres included do not by any means form "representative" sample of the urban areas not even of the industrial centres to which they apply. While Bombay was represented by four centres. Uttar Pradesh and Madras were represented by only one centre. This weighting system was not entirely satisfactory. The constituent series of all-India index are compiled by different organizations and the methods are not always the same. The housing group is particularly deficient in all the available indices. The miscellaneous group of items is usually represented only by a few items such as bidis, pan, supari and soap. The Bombay index includes under this group, seven items (barber, washing soap, medicine, supari, bidis, travelling and newspaper), but the Ahmedabad index includes only two items namely bidis and soap. The coverage of this group seems to be inadequate.
The International Conference of Labour Statisticians has suggested that the weighting pattern of consumption price index numbers should be changed at least once a decade. Whilst more frequent changes are not precluded, too frequent changes are not a practicable proposition."
(See Labour Demands and Their Adjudication by G. M. Kothari-1977 Edition) The same observations apply to this State also even if CPI base for the year 1960 = 100. The State Government would do well to constitute a Committee of Experts in the relevant disciplines to evaluate and revise the existing CPI figures considering the present day minimum needs of the workman and his aspirations to enter the 21st century.
Parties to bear their own costs.
37. Since the petitioners will have to meet the additional liability under the impugned notifications with effect from 1st April, 1985, a certain amount of hardship would be caused to them if they are called upon to pay in one lumpsum the additional wages due from 1st April, 1985 upto date. In the circumstances the petitioners are permitted to pay the difference in the arrears of D.A. in 4 monthly instalments. The first instalment shall be paid on or before 15th May, 1986 and the subsequent instalments on or before 15th July, 1986, 15th August, 1986 and 15th September, 1986. If the petitioners were to commit default in the payment of any of the instalments, then the entire amount in arrears shall become payable in lumpsum at once.