Karnataka High Court
M/S Sunrise Industrial Unit vs M/S Sunrise Industries on 20 August, 2013
Author: N.Kumar
Bench: N.Kumar
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 20th DAY OF AUGUST 2013
PRESENT
THE HON'BLE MR. JUSTICE N.KUMAR
AND
THE HON'BLE MR. JUSTICE V. SURI APPA RAO
WRIT APPEAL NO.3635/2012(L-Res)
BETWEEN :
M/s.Sunrise Industrial Unit,
AITUC, Tools Engineering and
General Workers Association,
No.314, 9th Main Road,
Milk Colony, Malleshwaram,
Bangalore - 560 003.
Rep. by its President. ...APPELLANT
(By Sri.K.B.Narayana Swamy, Adv. for
M/s.M.C.Narasimhan Associates, Advs.)
AND :
M/s. Sunrise Industries,
5th Main Road,
Sriramapuram,
Bangalore - 560 021,
Rep. by its Managing Partner. ...RESPONDENT
. . . .
This writ appeal is filed under Section 4 of the
Karnataka High Court Act praying to set-aside the order
passed in the writ petition No.18207/2011 dated
30.05.2012.
This writ appeal coming on for preliminary
hearing, this day, N.Kumar J., delivered the following:
-2-
JUDGMENT
This appeal is preferred against the order passed by the learned Single Judge, who has set-aside the order passed by the Industrial Tribunal, Bangalore following the judgment of the Apex Court in case of Airfreight Ltd., V/s. State of Karnataka and others reported in 1999(II) LLJ 741.
2. For the purpose of convenience, the parties are referred to as they are referred to in the petition.
3. The petitioner is engaged in the manufacture of textile looms and it is an Engineering Industry. Respondent is a Workers' Association and they submitted Charter of Demands to the Management on 09.03.2000 pursuant to which conciliation proceedings took place and a settlement was arrived at regarding revision of wages and increase in production. The terms of settlement arrived at was to be in operation from 01.04.2000 to 31.03.2001. One of the demands of the Association was for payment of Dearness allowance as -3- part of fair wages. They could not arrive at a settlement on the said issue as both the parties placed their own interpretation on the judgment of the Hon'ble Apex Court in Airfreight's case. Therefore, they agreed as under:
"The workmen agree that the dispute regarding wages and increment is settled. However, the issue of payment of Dearness Allowances remains unsettled and open for conciliation/adjudication etc., in view of the different perception by the management and workmen, in view of the latest supreme court decision the case of Airfrieght India. Hence, the Industrial dispute pertaining to Dearness Allowance subsists till the matter is finally decided.
The Association and the workmen hereby agree that they shall not raise any demand on the Management during the period of operation of this settlement. All the demands of the workmen raised in their letter dated 9.3.2000, except Dearness Allowance are deemed to have been settled/withdrawn by virtue of the settlement."
-4-
4. The workman raised a dispute with reference to payment of Dearness allowance. The Government referred the dispute for adjudication by the Industrial Tribunal. The reference dated 02.02.2001 reads as under:
1. PÁ«ÄðPÀ ªÀUÀðzÀªÀgÁzÀ ªÉÄB ¸À£ï gÉʸï EAqÀ¹ÃÖç¸ï WÀlPÀ EAf¤AiÀÄjAUï CAqï d£ÀgÀ¯ï ªÀPÀðgïì AiÀÄƤAiÀÄ£ï EªÀgÀÄ DqÀ½vÀ ªÀUÀðzÀªÀgÁzÀ ªÉÄB ¸À£ï gÉʸï EAqÀ¹ÃÖç¸ï EªÀgÀ ªÀÄÄAzÉ vÀªÀÄä ¨ÉÃrPÉAiÀiÁzÀ EAf¤AiÀÄjAUï G¢ÝªÉÄUÉ ¤UÀ¢ ¥Àr¹zÀ vÀÄnÖ¨sÀvÉåAiÀÄ£ÀÄß £ÁåAiÀÄAiÀÄÄvÀ ªÉÃvÀ£ÀzÀ eÉÆvÉUÉ ¥ÁªÀw ªÀiÁqÀ®Ä MvÁÛAiÀÄ¥Àr¸ÀĪÀÅzÀÄ £ÁåAiÀÄ ¸ÀªÀÄävÀªÉÃ?
2. ºÁUÀzÀÝ°è ¸ÀzÀj PÁ«ÄðPÀgÀÄ AiÀiÁªÀ ¥ÀjºÁgÀPÉÌ CºÀðgÀÄ?
Therefore, what is referred to the Industrial Tribunal is whether the workmen are justified in demanding dearness allowance prescribed for Engineering Industry. The Tribunal after recording evidence and considering the judgment of the Apex Court in the aforesaid judgment held that the said judgment has no application to the facts of this case. -5- The Tribunal was of the view that the Management was admittedly paying dearness allowance as payable to Engineering Industry. The Management was not a party to the Airfreight's case. The points involved in the said Airfrieght's case and the case on hand are totally different. There, the question was whether the Management was covered under the expression of Shops and Commercial Establishments and whether the notification issued under the Act prescribing minimum wages, applies to all kinds of commercial establishments. The said decision does not help the Management in any way. The said decision does not give raise to any cause of action to the Management to stop payment of dearness allowance, which they have admittedly been paying. There is nothing to show that the Management started paying dearness allowance applicable to Engineering Industry in view of the decision of the Hon'ble High Court. On the other hand, the Management has given an undertaking, by virtue of understanding with the Union that it would grant dearness allowance in accordance with the notification -6- under the Minimum Wages Act applicable to Engineering Industry. In fact the said assurance contained in the letter dated 12.03.1999, which is marked as Ex.W2. The Management has chosen to stop this payment on its own. The Management cannot unilaterally stop payment on its own. The reasons assigned by the Management for stopping payment of dearness allowance is that the Management has no financial capacity to absorb any financial liability. If that is the case, the Management would have adduced evidence about its financial capacity. No records to show the financial capacity of Management is produced. Even in the evidence of the witness M.W.1 Sundareshan also has not stated that the management has no financial capacity to pay the dearness allowance, which they were paying. In fact the Management was paying Dearness allowance, but subsequently stopped it contending that in view of the decision of Airfreight's case, it is not liable to pay. The said contention of the Management is not tenable because when once dearness allowance is paid by understanding, they -7- cannot stop the payment of the said dearness allowance. The Management should give notice and must make out a ground to stop payment of the dearness allowance. For the main ground, which is in respect of the financial incapacity, no evidence is adduced. Therefore, the principle in the Airfreight's case does not help the Management in any way and therefore, the reference was answered holding that the Workmens' Union is justified in demanding dearness allowance to the workmen as per the dearness allowance fixed by the State Government under Minimum Wage Notification applicable to Engineering Industry. It is this order of the Tribunal, which is challenged by the Management before the learned Single Judge.
5. The learned Single Judge, on re-appreciation of the entire oral and documentary evidence on record and after noticing the judgment of the Apex Court in the Airfreight's case has held that the law laid down by the Apex Court in Airfreight's case squarely applies to the facts of this case. There is an error in holding it -8- otherwise and therefore, the award passed by the Tribunal was set-aside and reference was answered in favour of the Management. It is against the said order, the present appeal is filed.
6. The learned counsel appearing for the appellant
- Workmens' Union contended that the learned Single Judge has not properly appreciated the case of the workmen. It is not their case that they were not paid minimum wages. To get minimum wages under the Act, one need not raise a dispute. Therefore, claim is the Management was paying dearness allowance earlier as per the settlement and now that has been withheld on the ground that they are not liable to pay the said amount in view of the judgment of the Apex Court in Airfreight's case. He submits that the said judgment of the Supreme Court has no application to the facts of this case. The Tribunal has granted the relief, which has been unjustly interfered with by the learned Single Judge.
-9-
7. In the light of the aforesaid submissions, the short point that arises for our consideration is:
Whether the workmen are entitled to dearness allowance in addition to the wages paid by the Management as per the notification issued in respect of the Engineering Industries?
The Tribunal has categorically held, while upholding the scheme of the workmen, as under:
In this case, there is nothing to show that this II party started paying dearness allowance applicable to Engineering Industry in view of the decision of the Hon'ble High Court. On the other hand, the management has given an undertaking by virtue of understanding with the workmen that it would grant dearness allowance in accordance with notification under the Minimum Wages Act applicable to Engineering Industry. In fact that the said assurance contained in the letter dated 12.03.1999, which is marked as Ex.W2.
8. Therefore, the foundation of the claim for dearness allowance is the notification under the Minimum Wages Act applicable to Engineering Industry.
- 10 -
In the aforesaid judgment of the Apex Court reversing the judgment of the High Court of Karnataka, it is categorically held as under:
Minimum rate of wages fixed under the Act is remuneration payable to the worker as one package of fixed amount. In cases where minimum wage is linked with the cost of living index, the amount paid on the basis of dearness allowance is not to be taken as an independent component of the minimum wages but as part and parcel of the process of computing the rates of minimum wages which is to be determined after taking into consideration the cost of various necessities.
While deciding the question of payment of minimum wages, the competent authority is not required to bifurcate each component of the costs of each item taken into consideration for fixing minimum wages, as lump sum amount is determined for providing adequate remuneration to the workmen so that he can sustain and maintain himself and his family and also preserve his efficiency as a workman. Dearness Allowance is part and parcel of cost of necessities. In cases where the minimum rates of wages is linked-up with VDA, it would not mean that it is a separate
- 11 -
component which is required to be paid separately where the employer pays a total pay package which is more than the prescribed rates of wages.
9. In the instant case, the learned Single Judge has set out in a table at para 19 for the year 2000 and 2003, the pay of the workmen as per the notification and as actually paid by the Management as under:
For the year 2000 As per The Pay Cover As per the notification Wages @ Rs.61.45 Wages @ Rs.55.00 DA @ Rs.25.75 DA @ Rs.29.86 Total: Rs.87.20 Total: Rs.84.86 For the year 2003 As per The Pay Cover As per the notification Wages @ Rs.73.45 Wages @ Rs.55.00 DA @ Rs.25.75 DA @ Rs.39.49 Total: Rs.99.20 Total: Rs.94.49
10. The wages component and dearness allowance is also mentioned. The said figures are not in dispute. It shows what is actually paid to the workmen is more than what is prescribed under the notification. In the
- 12 -
judgment of the Apex Court, they have given two illustrations; illustration No.1 and illustration No.2. Illustration No.2 applies to the facts of this case. Therefore, the claim of the workmen that they are entitled to dearness allowance as was being paid earlier to the judgment of the Apex Court has no substance. Even earlier to the judgment of the Apex Court, the wages were paid as per the notification, which also forms part of the settlement. The foundation of the claim is the amount mentioned in the notification. The workmen wanted dearness allowance as a separate amount apart from what is mentioned in the notification. Now the legal position is clarified by the Apex Court. The Management did not agree for the said demand of the workmen. They wanted to follow the law laid down by the Apex Court, where it has been stated that once payment is made according to the notification and if that wages includes dearness allowance, there is no question of paying any additional Dearness allowance because the wages include dearness allowance. Now that has been the view expressed by
- 13 -
the Apex Court in the aforesaid judgment. In that view of the matter when the Management is paying its workers the wages more than what is prescribed under the statute, this claim for additional dearness allowance is without any basis. The learned Single Judge was justified in interfering with the order passed by the Tribunal and in answering the reference in favour of the appellants. There is no merit in this appeal. Appeal stands dismissed.
Sd/-
JUDGE Sd/-
JUDGE SPS