Bombay High Court
Mukand Ltd. vs Mukand Kamgar Union And Anr. on 18 August, 1999
Equivalent citations: [2000(86)FLR27], (2000)ILLJ1569BOM
Author: A.P. Shah
Bench: A.P. Shah
JUDGMENT A.P. Shah, J.
1. This petition under Article 226 of the Constitution of India arises out of the award dated April 17, 1998 passed by the Industrial Tribunal, Mumbai in Reference (IT) No. 70 of 1996.
2. In this petition, the controversy relates to: (i) wage scale, (ii) fitment, (iii) special increments, (iv) dearness allowance, (v) education allowance, (vi) LTA, (vii) washing allowance, (viii) acting allowance, (ix) lunch and snacks allowance, (x) pollution allowance, (xi) picnic allowance, (xii) fixed allowance in lieu of incentive, (xiii) paid holidays, (xiv) privilege/casual/sick leave, and (xv) special advance. Though there are certain other matters dealt with in the award in the reference they are not the subject of controversy in this petition.
3. I shall now state the circumstances under which the reference came to be made to the Tribunal.
4. The petitioner is a public limited company engaged in steel making, manufacture of industrial machineries and steel castings, having two factories one at Kurla and the other at Kalwe. The factory at Kurla is basically a foundry which manufactures steel castings. The factory at Kalwe has two divisions: steel plant and the machine building division. The total work force employed by the company is around 3368, including the daily rated workmen numbering in all 1200. The daily rated employees at Kurla and Kalwe are represented by separate unions, both of which are recognised under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 for the respective establishments. At the time of reference the company was employing about 596 daily rated workmen in its Kurla establishment. All these daily rated workmen at Kurla unit were covered by the demands comprised in the reference.
5. The lowest grade of daily rated workmen at Kurla is 01 while the highest grade is 08. There were settlements in the past between the management and the respondent union representing the daily rated workmen at Kurla. After the expiry of the last settlement, signed on July 8, 1991 between the management and the respondent union, which was effective till March 31, 1995, a charter of demands was served by the union, which was processed under the provisions of the Industrial Disputes Act, 1947 and resulted in Reference (IT) No. 70 of 1996 to the Industrial Tribunal, Mumbai. There were 32 demands of the respondent union which were referred for adjudication.
6. The union concerned made a demand that the basic scale should be revised and replaced by the wage scales as set out below:
Unskilled:
Rs. 8.65-0-40-11.45-0.45-14.60-0.50-17.10-0.55-19.85 Unskilled Special Rs. 9.50-0.45-12.20-0.50-14.70-0.55-17.45-0.60-20.45 Semiskilled Rs. 9.65-0.50-13.15-0.55-17.00-0.60-20.00-0.65-23.25 Skilled B Rs. 11.00-0.55-14.85-0.60-19.05-0.65-22.30-0.70-25.80 Skilled Special-A Rs. 12.55-0.60-16.75-0.65-21.30-0.70-24.80-0.75-28.55 Skilled A Rs. 13.45-0.65-18.00-0.70-22.90-0.75-26.65-0.80-30.65 Highly Skilled B Rs. 16.25-0.75-21.50-0.85-27.45-0.95-32.20-0.80-30.65 Highly Skilled A Rs. 17.60-0.85-23.55-0.95-30.20-1.05-35.45-1.15-41.20
7. The union submitted that the scales of the workers have been fixed around 20 years before and it has become necessary to revise them. The union also asked for fitment in demand No. 3 of the charter of demands. The union submitted that the rate of increments have been very poor and hence to bring that workers to the proper scale of pay, commensurate with the length of service, it is necessary that the workmen should be given following service increments.
Upto 3 years = One increment Above 3 upto 5 years = Two increments Above 5 upto 8 years = Three increments Above 8 upto 10 years = Four increments Above 10 years = Five increments
8. The daily rated workers covered by this reference were being paid DA at the rate of 122% of the revised textile scale of DA. In addition to this, the workers were paid certain amounts as fixed DA at the lowest level i.e. grade 01 Rs. 13.70 as fixed DA per day. The union made a demand for introducing the following scheme of DA in respect of all the workmen with immediate effect:
Upto basic wage of Rs. 10 = 180% of revised textile DA.
Rs. 10.01 to Rs. 15 per day = 240% "
Rs. 15.01 to Rs. 20 per day = 330% "
Rs. 20.01 and above per day = 350% "
9. The union also demanded increase in the existing allowances, namely, (i) educational allowance, (ii) leave travel allowance, (iii) washing allowance, (iv) acting allowance, and (v) lunch and snacks allowance. The union further raised a demand, for introducing for the first time pollution allowance and picnic allowance. The union contended that the workers are exposed to pollution and, therefore, it was demanded by the union that (a) the company shall take necessary steps to reduce the effects of the air/acid pollution, sound pollution, heat and radiation hazards, (b) a monthly compensation of Rs. 1000 shall be given to all the workmen, (c) one litre milk per day shall be given to all workmen at the cost of the company, and (d) medical check-up of all workmen shall be done every three months by the company at its own cost. Towards the picnic allowance, the union raised a demand of Rs. 1000 per year.
10. There has been an incentive scheme in vogue for the Kurla factory and the workers thereof were paid incentive under the said scheme. The union demanded that in lieu of incentive scheme, fixed allowance should be paid to all the workers at the following rate:
Grade Amount per month 01 Rs. 800/-02
Rs. 900/- 03 Rs. 1,000/- 04 Rs. 1,200/- 05 Rs. 1,400/- 06 Rs. 1,700/- 07 Rs. 1,900/- O8 Rs. 2,000/-
11. The union also raised a demand for increasing the number of paid holidays and privilege/casual/sick leave. A demand was also raised for payment of special advance for emergency needs, marriage, illness, school admission, festival, religious ceremony etc. upto Rs. 20,000 per year.
12. In support of the above demands the union submitted that the principle of industry-cum-region had to be followed. The union submitted that the total emoluments of the workmen lagged behind the comparable concerns in the industry. The scheme of Dearness Allowance (DA) had come into existence through a settlement but the same was inadequate. In support of its plea for revised scheme of D.A. the union contended that the percentage of neutralisation has been reduced which can be seen from the variation of D.A. and fixed D.A. The union submitted that the financial position of the company is flourishing and therefore the demand of the revised textile scale at the rates mentioned above stands fully justified. The union has relied upon the wages paid to the workmen in various industries like Larsen and Toubro Limited, Mahindra and Mahindra, Tata Special Steel, Crompton Greaves and Chicago Pneumatics.
13. The company filed its balance sheet and profit and loss account from 1991-92 to 1996-97 and various other charts in support of its plea that it will not be able to bear the additional financial burden as the wages are revised as per the demand made by the union. The company submitted that its financial position is not sound and it is in fact deteriorating. The company also opposed it being compared with the concerns relied on by the union on the ground that they are not engaged in similar businesses and even otherwise they are not comparable with the petitioner company. The company submitted that its undertaking at Kurla is engaged in the manufacture of steel castings whereas Tata Special Steel produces steel wires; Larsen and Toubro is engaged in cement, construction, industrial equipments, ship business; Chicago Pneumatics produces pneumatic tools; Mahindra and Mahindra manufactures jeeps and range vehicles and Crompton Greaves produces electrical equipments and components. The company in its turn relied upon wage scales paid in Nitin Castings Limited and Uniabex Alloy Products Limited. It was contended by the company that the total wage packet of the comparable concerns should be considered to deal with the demand for change of existing D.A. system and keeping in mind that the basic wages in the like companies are comparatively low, there is no need for change of the D.A, scheme applicable to the company. The company argued that the existing scheme has stood the test of time and there is therefore no justification now to change the scheme. The company also opposed the demand of the union for increase in the various allowances as well as introducing new allowances like pollution allowance and picnic allowance, which according to the company are not paid by any industries in the region.
14. The Tribunal after considering the material produced before it held that the scales of the workmen have been fixed around 20 years before and it has become necessary to revise them. Increments have been fixed as far back as in 1974 and those increments have lost its relevance. The Tribunal held that having regard to the sound financial position of the company and the principle of industry-cum-region and the fact that the majority of workmen have been stagnated due to the existing basic wage scales, the demand of the union for basic wages and fitment is liable to be granted. The Tribunal also accepted the claim of the union for service increments as prayed for. The Tribunal accepted the data furnished by the union in respect of the comparable concerns like the balance sheet and profit and loss account, wage scales and other conditions and held that in the comparable concerns the wage scales and the service conditions are much higher than the wage scales and other service conditions of the daily rated workmen at Kurla unit. The Tribunal after considering the D. A. scheme prevalent in the comparable concerns came to the conclusion that in view of the fact that the CP1 has been showing the tendency to grow very fast, the demand for revision in the scheme of the DA deserves to be granted. The Tribunal accepted the claim of the union for pollution allowance and picnic allowance. The Tribunal also accepted the demand of the union for education allowance of Rs. 300 per month as well as the demand for one month's gross wage as leave travel allowance (LTA) per annum. The Tribunal directed that the LTA should be increased by Rs. 1000 for two years if the Travel Allowance is not released in any calendar year and is utilised in the subsequent year. The claims made by the union for increase in the washing allowance and lunch and snacks allowance and acting allowance were also accepted by the Tribunal. As far as the demand of the union for fixed allowance in lieu of incentive scheme is concerned, the Tribunal observed that the demand appears to be genuine and in order to avoid a feeling of the workmen of being defrauded in calculating the incentive, a fixed allowance as claimed by the union, should be granted. The Tribunal raised fixed holidays from 6 to 10 days, privilege leave from 16 to 20 days, casual leave from 8 to 13 days and sick leave from 11 to 16 days. The demand for special allowance of Rs. 20,000/-was also accepted. The legality and correctness of the award of the Tribunal is impugned in this writ petition under Article 226 of the Constitution.
15. The learned counsel for the petitioner Mr. Rele challenged the award on the ground that there is no evidence in support of the conclusions arrived at by the Tribunal and that it proceeded on the grounds which are irrelevant and contrary to the settled principle relating to the industrial disputes. Mr. Rele basically raised four contentions. First, Mr. Rele contended that the finding of the Tribunal, that the company's financial position is sound and it is capable of bearing the burden arising out of the demands placed by the workmen, is totally perverse. He contended that the company is facing serious financial problems and any additional financial burden would seriously affect the company. Secondly, Mr. Rele contended that the financial ability of the company to pay, cannot by itself be a justification for awarding revision of wage scales. According to the learned counsel, the wages are fixed on industry-cum-region basis and the Tribunal went wrong when it took into account for comparison, the industrial concerns which are entirely dissimilar to the petitioner's. Thirdly, the learned counsel contended that the Tribunal completely failed to take into account the total wage packet in the comparable concerns which has resulted in granting wages which in fact are far in excess of those prevalent in the so-called comparable concerns. Lastly, the learned counsel contended that the Tribunal was not justified in replacing the existing D.A. scheme which was prevalent for a long time and granting for the first time, the pollution allowance and picnic allowance, ignoring the industry-cum-region principle.
16. The moot question is whether the Tribunal has committed any error in holding that the company's financial position is sound and is capable to bear the burden placed on account of the demands of the workmen. Mr. Rele submitted that the Tribunal committed an error in holding that the company's average profit is Rs. 56.89 crores. He submitted that the average profit for the year 1991-92 to 1996-97 excluding the capital profits, works out to Rs. 32.22 crores against Rs. 56.89 crores worked out by the union and used by the Tribunal as the basis for its award. He submitted that the Tribunal has failed to apply its mind to the sharply deteriorating financial position of the company's business at Kurla factory and other business of the company. He drew my attention to the latest balance sheet showing the loss of Rs. 30.31 crores for the year March 31, 1999. He submitted that sales of the company have gone down and that the company has suffered heavy losses as its operations were adversely affected by severe recessionary conditions in the steel, engineering and automobile industries in particular, and economy in general. Mr. Rele also attacked the finding of the Tribunal that the burden on account of the workmen's demands works out to only Rs. 2.50 crores. He pointed out that on the basis of the impugned award the arrears payable for the period of 39 months from April 1995 to June 1998 excluding provident fund and gratuity, works out to Rs. 14.67 crores. He submitted that the picture is even more grim if similar increase in the emoluments as under the impugned award, is applied to the remaining employees currently on the roles of the company who are outside the purview of the present award. He drew my attention to the award passed by the Industrial Tribunal in Reference (IT) No. 3 of 1993 covering the monthly rated staff and officers of the company whereby an additional financial burden of more than 8 crores per annum is placed on the company. He also drew my attention to the recent settlement arrived in respect of the daily rated workmen at Kalwe unit and according to him the total burden on the company works out to nearly Rs. 21 crores per annum.
17. In reply Mr. Limaye, representative of the union, urged that the company's financial position is extremely sound. He submitted that there is consistent increase in the sales. The fixed assets as well as the investments of the company have also increased. He submitted that the company is the biggest foundry in the private sector. The company figures in the list of super-100 companies in private sector in India. The company has commenced Rs. 300 crores steel project at Hospet in collaboration with the Kalyani Group. The company has floated subsidiary companies, namely Mukand McNally Wellman Limited, Mukand Global Finance Limited and Mukand International Limited. The company has also taken over Beco Engineering Company Ltd. a sick company under the SICA Act. Another company by name Bombay Forging Limited is also taken over by the company through its wholly owned subsidiary. Mr. Limaye submitted that although during 1998-99 the company has registered losses, the company's position is improving, and according to him the future of the company is very bright.
18. In deciding the financial capacity of an industry, the Supreme Court has laid down in Ahmedabad Mill Owners' Association etc. v. The Textile Labour Assn. (1966-I-LLJ- 1)(SC) that "industrial adjudication must take into account the problem of additional burden which such wage structure would impose upon the employer and whether the employer can reasonably be called upon to bear such burden ... It is a long-range plan and in dealing with the problem, which is difficult and delicate, the financial position of the employer and the future prospects of the industry and the additional burden which may be imposed on the consumer must be carefully examined." The Supreme Court after referring to Reserve Bank Bulletin about the financial position of the industry and about cotton textile industry and other authorities on determining the financial capacity of an industry observed that "the industrial adjudication should not lean too heavily on such single-purpose statements or adopt any one of the tests evolved from such statements, whilst it is attempting the task of deciding the financial capacity of the employer in the context of the wage problem." Thus in determining the financial capacity of an industry all relevant factors will have to be taken into account. The principles followed in arriving at the profits and loss account for the income tax and other purposes may not be conclusive. The claim of the employer to a reasonable profit for all the shareholders for a fair dividend and interest of consumer and other relevant facts and circumstances will have to be taken into account.
19. In the instant case the petitioner company is a core industry in steel. It had a modest beginning 50 years back when the Kurla plant was started. The factory at Kurla makes steel castings, major products for railway bogies, chassis or under-carriages to the railway wagons. During the course of time, the company started its unit at Kalwe. At the Kalwe plant the company has heavy steel casting foundry to make casting upto 100 MT a piece. Steel castings are exported to CIS (erstwhile USSR) and other countries. Apart from this, the company supplies castings to sugar mills, cement industries, and public sector undertakings such as BHEL, BEML, BSP, etc. The alloy steel foundry manufactures and supplies a variety of allied steel castings for oil refineries, petrochemical units, diesel, mining and construction and defence. The company has been exporting its products. It has launched two subsidiary companies, namely, Mukand Dravd Wellman Ltd. and Mukand Soviet Engineering Limited. What then is the broad picture which emerges from the evidence on record in respect of the financial position of the company. During 1989-90 to 1996-97 the sales turnover has grown from 528 crores to 868.49 crores. The paid-up Capital of the company in 1991-92 was 14.73 crores. It has increased to 27.09 crores. The reserves were 105.13 crores. It has increased to 379.01 crores in 1996-97. The gross block including W.I.P. was 239.43 crores in 1991-92 and has increased to 445.13 crores. The net worth of the company grew from Rs. 107.49 crores to Rs. 406.02 crores. The total assets have grown from Rs. 262.04 crores to Rs. 990.67 crores. It is true that the company has been registering losses in the last year but that may be particularly due to the factor of recession which has affected the industries in general. If we examine the material on record it is seen that the company's business is constantly growing. Indeed the company is considered to be a biggest foundry in the private sector and it figures in the list of super-100 companies in India. The company has floated several subsidiary companies. It has also taken over certain other units through its wholly owned subsidiaries.
20. While examining the financial capacity in detail we must ultimately base our decision on a broad view which emerges from the consideration of all relevant factors, such as progress of the industry in question, prospects of the industry in future, extent of profit made by the industry, nature of the demand, which the industry expects to secure and the extent of the burden and its gradual increase which the employer may have to face. In the light of the material produced before the Tribunal it is not possible to agree with Mr. Rele that the company's financial position is not sound and is deteriorating in the recent past. I may however, hasten to add that Mr. Rele is right in criticising the Tribunal for arriving at the conclusion that the average gross profit of the company is Rs. 86.89 crores. It seems that the Tribunal has mechanically adopted the figures submitted by the union without even considering the written submissions placed by the company on record. Mr. Rele is right in his contention that the average profit excluding the capital profit works out to Rs. 34.22 crores and not Rs. 56.89 crores. It seems that the average profit figures were wrongly arrived at by adding back the balance investment allowance reserved at the end of each year. This reservation was not even debited as provisions before arriving at each year's profit. Mr. Rele is also right in contending that the Tribunal has committed a mistake in holding that the net financial burden of the company on account of the demands of the workmen would be only Rs. 2.60 crores. The burden works out approximately to Rs. 7.40 crores per annum. Mr. Limaye tried to argue that the figures of burden are calculated by the Union taking into account the fact that the Government is going to bear 50% burden by way of tax rebate. It is not possible to accede to the argument of Mr. Limaye for the simple reason that the company is not required of pay tax at the rate of 50%. It has been pointed out by the company that the present corporate tax is 32%. Taking into account the permissible deductions under the Income Tax Act in the next 2/3 years the company will be covered by the provisions of Section 115-JA of the said Act and will pay the only Minimum Alternate Tax (MAT). On this basis, the tax rate to be considered for the purpose of burden could be hardly 10%. Under the circumstances the finding of the Tribunal that the total burden on account of the demand of the workmen is only Rs. 4.40% of the gross profit is obviously not correct and in fact it works out to 21% of the gross profits and this fact assumes importance having regard to the fact that the present award covers only approximately 576 daily rated workmen at Kurla unit. The fact that the additional burden is cast on the company on account of the award passed in respect of the monthly rated staff and officers of the company will also have to be kept in mind while determining the wage structure of the workmen.
21. The next contention of Mr. Rele is that the financial ability to pay cannot by itself be a ground for awarding revision or service conditions. The learned counsel urged that the real criterion should have been to look to the overall pay structure of the workmen in the light of standard prevailing in the similar industries in the same region. Reference was made to the decision of the Supreme Court in Remington Rand of India Ltd. v. Workmen 1969 (19) FLR 46, where it was observed:
"As regards the first ground, it is true that in the present case there was no question of the company being unable to bear the additional burden of lunch allowance. But the fact that an employer, is able to bear the burden is not the criterion. The foundation of the principle of industry-cum-region is that as far as possible there should be uniformity of conditions of service in comparable concerns in the industry in the region so that there is no imbalance in the condition of service between the workmen in one establishment and those in the rest The danger otherwise would be migration of labour to the one where there are more favourable conditions from those where conditions are less favourable. Therefore the mere fact that a particular concern can bear an additional liability would by itself be no ground to impose upon it such extra obligation. Equally important is the fact that the wage structures prevailing in the appellant company is indisputably fair and the dearness allowance paid to the workmen has been as aforesaid linked with the index of cost of living. These must take care of the rise in the cost of living from time to time. If, compelled to pay lunch allowance to all workmen including those who work at the office it would, in fact, mean a double provision for the constituent of the cost of food already provided for, in the wage scales and the rates of dearness allowance. The force of this aspect was recognised by this Court in Mekod and Co. Ltd. v. Workmen (1964-I-LLJ-386).
22. Mr. Rele urged that the Tribunal went wrong when it took into account for comparison the industries concerned which were entirely dissimilar to the petitioner company. I find some merit in the submission of Mr. Rele. It is well-settled that the principle of industry-cum-region has to be applied by the Industrial Court, when it proceeds to consider the questions like the wage structure, D. A. and similar service conditions. In applying that principle the Industrial Courts have to compare the wage scales prevailing in the similar concerns with which it is dealing and generally speaking similar concerns would be those in the same line of business as a concern with respect to which the dispute is under consideration. In Williamsons (India) Private Ltd. v. Their Workmen (1962-I-LLJ-302) the Supreme Court had to consider this aspect of the matter, where Williamsons Private Limited was compared by the Tribunal with Gillanders Arbuthnot and Company for purposes of wage fixation, and it was observed that the extent of the business carried on by the concerns, the capital invested by them, the profits made by them, the nature of business carried on by them, their standing, the strength of their labour force, the presence or absence and the extent of reserves, the dividends declared by them and the prospectus about the future of their business and other relevant factors have to be borne in mind for the purpose of comparison. These observations were made to show how comparison should be made, even in the same line of business and were intended to lay down that a small concern cannot be compared even in the same line of business with a large concern. Approving the view expressed in the above decision in French Motor Car Company Limited v. Workmen (1962-II-LLJ-744) the Supreme Court observed at page 20 that comparison should be made in the same line of business and similar concerns cannot be compared even in the same line of business with a large concern. When there is large disparity in the two concerns in the same business, it would not be safe to fix same wage structure as in the large concerns without any other consideration.
23. In Workmen of Balmer Lawrie and Company v. Balmer Lawrie and Company (1964-I-LLJ-380) the Supreme Court held that in determining the question whether one concern is comparable with another in the matter of fixing wages, the total capital invested by the concern, the extent of its business, order of the projects made by the concern, dividends paid, the number of employees employed in the concern, the standard in the industry to which it belongs and other matters have to be examined. In Greaves Cotton and Company and Ors. v. Their Workmen (1964-I-LLJ-342) after referring to the decision in French Motor Car Company Limited v. Its Workmen (supra) the Supreme Court held that the principle is that in applying the industry-cum-region formula for fixing the wage scales, the Tribunal should lay stress to the industry part of the formula if there were a large number of concerns in the same region carrying on same business but where the number of industries of the same kind in a particular region was small, it was a region part of the formula which assumes importance. In the former case in order that the production costs may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the same kind.
24. It is a common ground that "Mukand Limited is a biggest foundry industry in the region and is paying highest wages in its own line of business. The foundry industries referred by the petitioner company i.e. Nitin Castings Limited and Uniabex Alloy Products Ltd. are smaller units and having regard to the fact that the wages paid in those units are much lower than the petitioner company, they will have to be excluded from consideration. Under the circumstances the region part of the industry-cum-region formula would assume importance in the present case. The union has referred to as many as 5 companies as comparable concerns. Out of these 5 concerns in respect of Larsen and Toubro and Mahindra and Mahindra, apart from the fact that they are carrying on business in a totally different line they are much bigger concerns and the following chart clearly demonstrates this:
Average Gross Profit Sales Gross Share Dividend (sic) Reserves (sic) Capital (sic) Larsen & Toubro Ltd. (Rupees in crores) 409.7 5,388.0 3,821.0 60% 248.5 2,856.3 Mahindra & Mahindra 179.5 3,607.6 1,146.4 50% 101.8 995.0 Mukand Ltd.
34.2 886.4 445.1 25% 27.0 379.0 It is seen that in the case of Larsen & Toubro, sales are higher by six times and gross profits are higher by twelve times, whereas in Mahindra & Mahindra both sales and gross profits are higher by five times. Considering the nature of business of these two concerns and also the fact that they are far bigger companies than the petitioner company, these two concerns will have to be excluded from consideration.
August 19, 1999
25. Turning then to the wages fixed by the Tribunal I am clearly of the view that the Tribunal has completely overlooked the wages prevalent for the relevant categories in the concern which it had considered comparable. It has been consistently held by the Supreme Court that the total wage packet paid in the comparable concerns is required to be taken into account (see Greaves Cotton & Co. v. Their Workmen, (supra) and Novex Dry Cleaners' New Delhi v. Their Workmen (1962-I-LLJ-271). It seems that the Tribunal has failed to consider the wages and allowances and other amenities given to the workmen and comparing their total wage packet with the total wage packet of those employees in the other concerns. The Tribunal has virtually decided the question in issue exclusively on the basis that the employer has the financial capacity to stand the burden of the revised wage structure granted to the workmen. The Tribunal has not cared to consider what wages were paid for those categories in the comparable concerns even though it appears that relevant data was considered in bits and pieces and this has resulted in granting the wages which are far in excess than those payable in comparable concerns. This is clearly demonstrated by the chart submitted on behalf of the company:
Comparison of total emoluments at CPI 100092 (Excluding P.F. and Gratuity) Gr Spl. Steel Crompton Greaves Chicago Pneumatic Min.
Max.
Min.
Max.
Min.
Max.01 8842
10036 8100 10150 10476 11018 02 8872 10229 03 8901 10422 8108 10552 10483 11213 04 8930 10762 8228 11503 10493 11411 05 8959 10996 8621 12118 10518 11789 06 8990 11230 8879 12372 10694 11988 07 9018 11464 9124 12499 11085 12582 08 9346 11902 9362 12788 11481 12911 Mukand Kalwe (new) Mukand Kurla (old) Kukand Kurla (award) 1.12.98 - 31.5.2002 1.4.1995 1.4.91-31.3.1995 01 5999 6543 4809 4906 8645 12834
02. 6109 6751 4854 4975 8778
14564 03 6301 7042 4908 5054 8919 14787 04 6613 7436 5104 5274 11111 15109 05 6899 7804 5159 5354 11387 15421 06 7023 8003 5224 5444 11754 15823 07 7587 8608 5462 5753 14053 16287 08 7757 8841 5543 5863 14230 16534
26. The reading of the above chart shows that the wages fixed by the Tribunal are much in excess than those payable in the comparable concerns. In particular they are more than double, as compared to the wages payable to the similarly situated workmen at Kalwe unit of the company. It would not be out of place to mention that the wages of the workmen in Kalwe unit have been fixed pursuant to a settlement with the recognised union as recent as in January 1999. The Tribunal has completely overlooked the wages prevalent for these categories in concerns which it had concerned comparable. I may add that wages fixed by the Tribunal exceed even those payable in Larsen and Toubro and Mahindra and Mahindra which in my opinion are not really comparable and this is clearly demonstrated in the following chart:
Grade Larsen & Toubro Mahindra & Mahindra Mukand-Kurla Minimum Maximum Minimum Maximum Minimum Maximum 01 5629 9214 6166 9666 8645 12834 02 8778 14564 03 5634 9951 6180 10520 8919 14787 04 5647 11218 6201 11131 11111 15109 05 5688 11446 6215 11737 11387 15421 06 7414 11679 6229 12123 11754 15823 07 8988 12021 7366 12555 14053 16287 08 10016 12148 8474 12705 13135 16534 Thus it is clearly seen that the Tribunal has failed to apply its mind to the total wage packet in the comparable concerns resulting in granting of excessively high and inflated wages. The trouble with the award of the Tribunal is mat only the highest figures in comparable concerns have been considered while dealing with the demands of the workmen, disregarding the total wage packet in the comparable concerns. In such a situation, ordinarily I would have remanded the matter to the Tribunal for fresh adjudication. However, Mr. Limaye has strongly appealed to this Court not to remand the matter in order to avoid further delay and also in order to avoid further litigation and to fix the wages of the workmen in keeping with the wages payable in the comparable industrial concerns. Mr. Limaye further, submitted that since the entire data is available to this Court and the parties have submitted the necessary charts before the Court, this Court, itself can determine the wage structure of the workmen. I am inclined to accept the request made by Mr. Limaye. The dispute has been pending for the last 4 years. The order of remand would further delay the proceedings, depriving the workmen of just and fair wages, moreover, the matter has been exhaustively argued by both sides on every point. Under the circumstances I shall proceed to deal with the various demands made by the workmen.
27. Basic Wage Scale: In regard to this demand the Tribunal has rightly observed that the scales of the workers have been fixed around 20 years back and it has become necessary to revise them. The Tribunal has noted that the company's witness has admitted that since 1991 the number of permanent workers have been reducing and no new workers have been made permanent except those as per the settlement of 1997. Those workers have already put in more than ten years' service and this indicates that no worker exist in the company who has put in less than ten years of service. It is not disputed by the company that the basic wage scale paid to the concerned workmen is much less compared to the other comparable companies and therefore, in my opinion, the Tribunal has rightly accepted the demand relating to re-fixation of basic wages and fitment.
28. Service increments: This brings us to the demand for service increments. It was submitted on behalf of the company that service increments can only be justifiable if the wage scales were being fixed for the first time or if there is a finding that the wage scales were low. It was submitted that none of the circumstances existed for grant of the demand. The Tribunal has rightly held feat the rate of increments has been very poor and hence to bring the workers on proper scale of pay commensurate with the length of service, it is necessary that the worker should be given service increments. It will help in maintaining differential in the years of service put in by the worker and further this also will help in ensuring proper scale of pay to the workers for long years of service. Considering the prevailing practice in the comparable concerns in my opinion the Tribunal has not committed any error in accepting the demand of the workmen for service increments. However, to my mind the increments granted under the award are rather excessive and keeping in mind the increments admissible to workmen in comparable concerns the service increments are fixed as follows:
Upto 5 years One increment Above 5 years & upto 10 years Two increments Above 10 years & upto 18 years Three increments Above 18 years & upto 24 years Three increments Above 24 years Four increments
29. Dearness Allowance: The question of D.A. was hotly contested by the parties. It was contended by the company that the total wage packet of the comparable concerns should be considered to deal with the demand for change of existing system and keeping in mind that basic wages in the latter companies are comparatively low there is no need for change of the D.A. scheme applicable to the company, It was argued on behalf of the company that the existing scheme has stood the test of time and there is therefore no justification now to change the scheme. Reference was made to the decision of the Supreme Court in Workmen v. Management of Reptakos Brett & Co. Ltd. (1992-I-LLJ-343). The Tribunal after considering the D.A. scheme prevalent in the comparable concerns came to the conclusion that the demand for revision in the scheme of D.A. deserves to be granted. The Tribunal pointed out that the percentage of neutralisation has been reducing which can be seen from the variation of D.A. and the fixed D.A. Therefore the quantum of D. A. which at the lowest level has been 143% of revised textile scale has been reduced to 130% of revised textile scale with the increase in the index number and at the highest level it has come down from 155.20% to 147.81% of the revised textile scale of D.A. Relying upon the judgment of the Apex Court in Workmen v. Reptakos Brett & Co. Ltd. (supra) the Tribunal has held that the demand for change in the existing scheme of D.A. deserves to be accepted. As indicated earlier the workers covered by this reference were being paid DA at the rate of 122% of the revised textile scales of DA and in addition the workers were paid certain amount as fixed DA at the lowest level, i.e. grade 01 Rs. 13.17 as fixed DA per day. Under the award the Tribunal has revised the DA as under:
Upto basic of Rs. 10 = 180% of revised textile DA Rs. 10.01 to Rs. 15 per day = 240% "
Rs. 15.01 to Rs. 20 per day = 300% "
Rs. 20.01 and above per day = 350% "
30. It seems that the Tribunal has considered comparison of basic wages in Special Steels Ltd. but not the DA scheme prevailing in the company which is uniform for all grades at 212% neutralisation and has considered companies like Larsen & Toubro Ltd. and Mahindra & Mahindra Ltd. for the purposes of comparison of DA ignoring the fact that the basic wages in the latter companies are comparatively lower. In fact percentage of the neutralisation granted by the Tribunal under the impugned award is highest among the alleged comparable concerns. In the case of Crompton Greaves Limited the minimum rate of D. A. in terms of the revised textile scales of D.A. works out at the minimum level to 240% of the revised textile scale of D.A. while at the highest level 285%. In Chicago Pneumatic Limited it varies from 286% to 306%. In Kalwe unit of the petitioner the D.A. works out to 172% to 208% as per the recent settlement. Keeping in mind the DA granted in the comparable concerns, I feel that the ends of justice would be served if the DA awarded by the Tribunal is revised as Upto basic of Rs. 10 = 180% of revised textile DA Rs. 10.01 to Rs. 15 per day = 210% "
Rs. 15.01 and above per day = 250% "
The union's representative has no objection to the modification of the DA scheme as mentioned above and the D.A. granted by the Tribunal stands modified accordingly.
31. Educational Allowance. Coming then to the education allowance, the Tribunal has fixed the same at Rs. 300 per month. In this regard the Tribunal has relied upon the fact that Rs. 410 is paid as educational allowance to the workers of Crompton Greaves. It is true that in Kalwe factory the education allowance granted under the settlement is less than what is awarded by the Tribunal but I do not see any reason to interfere with the award of the Tribunal in respect of the education allowance.
32. L.T.A. This brings us to the leave travel allowance (LTA). At present the workers are paid a fixed LTA at the following rate:
Grade Amount 01 to 03 Rs. 1,920/-
04 to 08 Rs. 2.160/-
The demand of the workmen, which has been accepted by the Tribunal, is for one month's gross wage as LTA every year. After considering the LTA paid in the comparable concerns including the Kalwe factory, I fix the LTA as Grade Amount 01, 02 & 03 Rs. 3,000/-
04, 05 & 06 Rs. 3,750/-
07 & 08 Rs. 4,500/-
33. Washing Allowance and Snacks Allowance: As far as washing allowance is concerned, the Tribunal has increased the allowance from Rs. 30 to Rs. 100 per month, and the lunch and snacks allowance is fixed at Rs. 50 and Rs. 25 respectively. I do not see any reason to interfere with the award of the Tribunal as far as these two allowances are concerned.
34. Acting Allowance: At present the acting allowance per day in the case of special grade is as Acting allowance per day for acting in the next step grade:
Step I Grade Step II Grade Step III Grade 01 0.70 1.55 2.70 02 0.85 2.00 3.00 03 1.15 2.15 3.15 04 1.00 2.00 4.15 05 1.00 3.15 5.15 06 2.20 4.05 07 1.90 In Kalwe unit of the petitioner a similar scheme for acting allowance is applicable and as per the settlement of January 1999 the rate of acting allowance granted to the daily rated workmen at Kalwe unit is as Acting allowance per day for acting in the next step grade Grade Step I Step II Step III 01 3.00 6.00 12.00 02 6.00 12.00 18.00 03 12.00 15.00 18.00 04 12.00 15.00 18.00 05 12.00 18.00 24.00 06 18.00 24.00 The Tribunal has accepted the demand of the workmen in toto. The effect is that the acting allowance is increased by four times. In my opinion it would be just and fair if the acting allowance is fixed at the same rate at which the employees at Kalwe unit are paid as per the settlement dated January 11, 1999 and accordingly it is directed that the workmen would be entitled to acting allowance as per the said settlement.
35. Fixed allowance in lieu of incentive scheme: As regards the demand for fixed allowance in lieu of incentive scheme, I am of the opinion that accepting such a demand would defeat the very object of incentive scheme. The incentive scheme is in vogue for a long time. The Tribunal has accepted the demand by merely observing that the demand seems to be genuine. The union has sought to justify this demand on the ground that the workers felt cheated by the calculations in the incentives as per the existing scheme. I am afraid that there is hardly any justification for dispensing with the incentive scheme which has been introduced with the object of increasing the production of the company. The demand for fixed allowance in lieu of incentive scheme thus stands rejected.
August 20, 1999
36. Pollution Allowance: The demand of the workmen in respect of pollution allowance is as
(a) the company shall take necessary steps to reduce the effects of the air/acid pollution, sound pollution, heat and radiation hazards
(b) a monthly compensation of Rs. 1000 shall be given to all the workmen,
(c) one litre milk shall be given to all workmen at the cost of the company, and
(d) medical check-up of all workmen shall be done every three months by the company at its own cost.
There is no dispute as far as items (a) and (d) are concerned. The management has, however, strongly objected to the demand for monthly compensation of Rs. 1,000 and one litre milk. It seems to be almost an admitted position that no such allowance is paid to the workmen in any company comparable or otherwise in Mumbai. In my opinion the company is right in contending that the grant of allowance which lays the quantum granted has no basis in fact or in law. It is also the contention of the company that there was no material before the Tribunal to show how drinking of milk or receiving a sum of Rs. 1,000 every month would help the situation. It is contended that the Tribunal has granted the demand in total disregard to the principle of industry-cum-region basis. It seems that the Tribunal was swayed by the evidence of Dr. Vijay Kanhare. Dr. Kanhare has admitted in his cross-examination that he is not a qualified doctor. He has also admitted that he had not communicated with the company in connection with his alleged visit to the company and that he had not clinically examined any workman or seen any medical report of the workmen. He has also admitted that he had not given a copy of his report to the company. Under the circumstances the evidence of Dr. Kanhare is of little value in determining the question of pollution allowance.
In my opinion, in the absence of any material to show that any comparable industry is paying such allowance, it was not proper on the part of the Tribunal to grant the pollution allowance and the benefit of one litre milk. The demands of the workmen in Clauses (b) and (c) are therefore rejected.
37. Paid Holidays and Privilege Leave/Casual Leave/Sick Leave; This brings me to the controversy regarding the demand for paid holidays and privilege/casual/sick leave. At present the workmen covered under the reference are getting 6 paid holidays whereas the Tribunal has increased the same to 10 days. Casual leave admissible is 8 days in a year whereas the Tribunal has accepted the demand for 13 days, casual leave. Sick leave in a year is 11 days which is increased to 16 days, and the privilege leave is increased from 16 days every 240 days to 20 days every 240 days. Mr. Rele criticised the increase in the paid holidays. He contended that there is no reason for granting increased paid absence which is clearly above the pattern of comparable concerns. I find considerable substance in the contention of Mr. Rele. It is hardly necessary to say that especially at the present time emphasis in the country should be more on increased production and absence in work should not be unduly encouraged. At present the paid holidays and leave benefits enjoyed by the workmen at Kurla factory are the same as admissible to workers of the Kalwe factory. In my opinion, the demand for increased paid holidays as well as increased benefits on the above count is liable to be rejected.
38. Picnic Allowance: The Tribunal has accepted the demand made by the union for picnic allowance at the rate of Rs. 1000 per annum. This is altogether a new demand made by the union. It is not shown that such an allowance is paid in any other comparable concerns in Mumbai. In granting such allowance the Tribunal has completely disregarded the principle of industry-cum- region. The demand for picnic allowance is therefore rejected.
39. Special Advance: In principle I do not find anything wrong with this demand but such a special advance has to be restricted for emergency needs. The demand for granting such special advance as a matter of right every year is not at all justified. Mr. Rele for the company has fairly stated that the company is prepared to pay special advance upto Rs. 20,000/- for emergency needs like marriage, illness, etc. and such a claim made by a workman will not be unreasonably denied.
40. In view of the foregoing discussions the writ petition succeeds partly. The award passed by the Industrial Tribunal stands modified to the extent indicated hereinabove. The payment made to the workmen under the interim orders shall be liable to be adjusted towards the payments under the award. No orders as to costs.