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ment of the U.P. Government revised scales for sugar factories in U.P. regarding pay, dearness allowance and other benefits.

The second Wage Board for the sugar industry gave its report in 1970. The Wage Board's report was due to expire on 31st October, 1974. The Government of U.P. on 31st October, 1974, issued the U.P. Pattern Scales of Wages and Dearness Allowance for workmen employed in all sugar factories working by vacuum Pan Manufacturing Process. The Labour Minister gave the award and as a result of that award, an order was passed under section 3 sub-clause (b) of the U.P. Industrial Disputes Act, 1947. This order relating to U.P. Pattern of Pay, Graduated Dearness Allowance, Variable Dearness Allowance came into force from 31st October, 1974 and effect was to be given to these pay-scales and dearness allowance from 1st October, 1974. As the sugar factories were seasonal factories a retention allowance for unskilled seasonal workmen for off-season at the rate of 10% of the basic wage and dearness allowance payable during the crushing year 1974-75 was also provided for. The demand put forward by the workmen in all these appeals is for payment according to the U.P. Pattern.

The Industrial Court, Gujarat, increased the graduated dearness allowance of the unskilled employees from Rs. 21 to Rs. 40. But this increase was not given at one stage but was spread over in three stages, the first stage being from 1st July, 1976 to 30th June, 1977, the second stage being from 1st July, 1977 to 30th June, 1978 and the third stage being from 1st July, 1978 to 30th June, 1979 and onwards. The increased graduated dearness allowance for the first period would be Rs. 32 per month; for the second period Rs. 36 per month and for the third period Rs. 40 per month. The existing basic wage for the unskilled employee is Rs. 110. The variable dearness allowance of Rs. 151 per month is being paid and the Court found that there was no dispute as raised in demand No. 2(c). Regarding variable dearness allowance demand Nos. 3, 4 and 5 the Court revised the rates from 83 paise per point on the rise over 301 points of All India Average Consumer Price Index Number for Industrial Workers (Base 1960-100) at Re. 1.00 per point for skilled B operatives and for clerks drawing upto Rs. 150 per month as asked for in demand 5(i) (b) and from Re. 0.95 to Re. 1.12 for All India Average Consumer Price Index for other employees as per demand No. 5(i)(d). This increase was also spread over for a period of three years i.e. 7 paise for the first period from 1st July, 1976 to 30th June, 1977; 5 paise for the second period from 1st July, 1977 to 30th June, 1978; and 5 paise for the third period from 1st July, 1978 to 30th June, 1979 and onwards. Regarding demand No. 7 relating to retaining allowance to be paid to the unskilled seasonal employees at the rate of 10 per cent of the basic wage and dearness allowance payable during the crushing season 1974-75 and for subsequent years, the Court found that the demand was justified. The Court gave a retention allowance of 10%, as demanded, of the basic wage and dearness allowance payable during the crushing season 1974-75 and also for the three subsequent years.

It is strongly urged on behalf of the appellants that the High Court and the Tribunal were in error in allowing neutralisation of variable dearness allowance of 125% which is beyond the permissible limits of the industrial law.

It is common ground that 100% neutralisation would be achieved by granting an increase of 83 paise for rise in one point in the cost of living index. By granting an increase of one rupee for increase of one point the neutralisation is by 125%. Dearness Allowance was primarily intended as a protection of persons whose salaries are at the subsistence level to protect them against the adverse effects of the rise in prices. The Commission on Dearness Allowance in May, 1967 stated that historically dearness allowance was regarded as applicable to those employees whose salaries are at the subsistence level or at a little above in order to enable them to face the increase in dearness of essential commodities. The National Commission on Labour, 1969, observed that unless money wages rise as fast as consumer prices it will result in an erosion of real wages. But the extent of its impact will depend on the margin of erosion available at different levels of income. The Commission recommended that 95% neutralisation should be granted against rise in cost of living to those drawing minimum wage in non-scheduled employments.

Demand No. 7 relates to claim for payment of retaining allowance for the unskilled seasonal employees in the off- season at the rate of 10% of their basic wage and dearness allowance payable during the crushing season 1974-75. The Industrial Court as regards demand No.7 directed that the unskilled seasonal employees be paid retaining allowance for the season 1975 at the rate of 10% of the basic wage and dearness allowance payable during the crushing season 1974-

75. The claim regarding the variable dearness allowance is demand No. 2(c) and 5(1) (a) (b). There is no reference in the proceedings before the Industrial Court or the High Court that the variable dearness allowance of more than 100% equalisation was awarded due to the seasonal employment of the workers. In the result we accept the contention of the appellants that variable dearness allowance cannot be more than 100% neutralisation.