WORKMEN REPRESENTED BY SECRET ARY

v.

MANAGEMENT OF REPTAKOS BRETT.

AND CO. LTD. AND ANR.

OCTOBER 31, 1991

[RANGANATH MISRA, CJ. AND KULDIP SINGH, J.]

Labour law:

Industrial dispute-Minimum wages-Determination of Dearness

A

B

Allowance scheme-Whether can be altered to the prejudice of workmen. C

Industrial Tribunal-Abolition of existing dearness allowance

scheme-Directions to link dearness allowance with pre~war cost of living

index-Validity of

Constitution of India:

Art

136: Industrial Tribunal and High Court acting in oblivion of

legal position causing manifest injustice to

workmen-'Supreme

Court--Whether can interfere.

D

The respondent-company, in its factory set up at Madras in E

1959, introduced slab system of dearness allowance (DA) i.e. the DA

paid to the workmen was linked to the cost of living index as well as

the basic pay. The double linked DA scheme, being consciously ac­

cepted as basic constituent by the company and its workmen in

various settlements between them, became basic feature of the wage­

structure and remained operative in the company for about 30 years. F

In the year 1983, a dispute arose between the company and its

workmen. The matter was referred to the Industrial Tribunal. One

of the issues before the Tribunal was based on the demand of the

Management for restructuring of the dearness allowance scheme

and to frame a new scheme. The Tribunal abolished the existing G

slab.$ystem of DA and directed the dearness allowance to be linked

only to the cost of living index at 33 paise per point over 100 points

1

at the Madras city cost of living index 1936 base.

Before

the High Court, both the parties agreed not to press

their respective writ petitions except on the

i!"~' ol rdtructuring t-f H

129

A

B

c

D

E

F

130 SUPREME COURT

REPORTS [1991] SUPP: 2 S.C.R.

DA. Upholding the findings of the Tribunal on the sole surviving

issue, the Single Judge dismissed the workmen's writ petition.

The

intra-Court appeal filed by the workmen was

also dismissed. Ag­

grieved, the workmen filed the appeal by special leave to this Court.

It was contended on behalf of the workmen that the Tribunal

and High Court grossly erred in taking Rs. 26 as a pre-war wage of

a worker in Madras region and holding that the rate of neutraliza­

tion on the basis of cost of living index in December, 1984 was

192%; that even assuming that there was over-neutralization, the

existing pay structure/DA scheme could not be revised to the preju­

dice of the workmen unless their pay structure was within the con­

cept

of 'living wage' and, in addition, it was proved that financially

the .company was unable to

bear the burden; and that the company

could not be permitted to abolish the DA scheme to the detriment of

the workmen much less on the plea that the said scheme was more

beneficial than the

DA schemes adopted by other industries in the

region.

The respondent, contended that the company had proved to

the satisfaction

of the

Tribunal that financially it was not in a posi­

tion to

bear the burden of existing DA scheme; that its workmen

were in a high-wage island and as such the revision

of DA scheme

was justified.

It was

also contended that so long as there was some

basis

and material to

validate the award, the jurisdiction under

Article 136 ofthe Constitution stood repelled.

On the question; whether the Management is entitled to re­

structure the DA scheme to the prejudice of the workmen on the

ground that the existing system had resulted in over-neutralization

thereby landing the workmen in the high-wage island

Allowing the appeal of the workmen, this Court,

HELD:

1.1. The management can revise the wage structure

G to the prejudice of the workmen in a case where due to financial

stringency it is

unable to bear the burden of the existing-wage. But

in an industry or the employment where the wage structure is at the

level of minimum wage, no such revision at all, is permissible-not

even on the

ground of financial stringency. [p. 142 E)

H

Monthly-Rated workmen at the Wada/a factory of the

India!' Hume

I'

.t-

WORKMEN v. MANAGEMENT OF REPTAKOS BRETT. 131

Pipe Co. Ltd. v. Indian Hume Pipe Co. Ltd., Bombay, (1986) 2 S.C.R. A

484, relied on.

Mis Crown Aluminium Works v. Their Workmen, (1958)

S.C~R.

65L~ Ahmedabad Mills Owners' Association etc. v. The Textiles La­

bour Assosication, [1966) 1 SCR 382, referred to.

Killick Nixon Ltd. v. Killick & Allied Companies Employees Un-B

ion, [1975) Suppl. S.C.R. 453, distinguished.

1.2

The employees are entitled to the minimum wage at all

times

and under all circumstances. An employer who cannot pay the

minimum wage

has no right to engage labour and no justification to

run the industry. (p. 137 CJ C

1.3 It is for the management, seeking to restructure the DA

scheme to the disadvantage

of the workmen, to prove to the satisfac-

tion

of the tribunal that the wage-structure in

the industry con­

cerned is well above minimum level and the management is finan­

cially not in a po~ition to bear the burden of the. existing wage- D

structure. [p. 142 F]

.

2.1 The concept of 'minimum wage' is no longer the same as it

was in 1936. Even 1957 is way-behind. A worker's wage is no longer

a contract between an employer and an employee. It has the force of

collective bargaining under the labour laws. Each category of the E

wage structure has to be tested at the anvil of social justice which is

the live-fibre of our society today. [pp. 136 H, 137 A]

2.2 The Tripartite Committee of the. Indian Labour Confer­

ence'-1957 has formulated five norms for the fixation of 'mini­

mum wage' (i) three consumption units for one earner disregarding F

earnings of women, children and adolescents; (ii) minimum food

requirement based on net intake calories; (iii) clothing requirement

at 72 yards per annuam for an average working family of four; (iv)

house

rent corresponding to minimum area provided for under the

Government's

Industrial Housing Scheme; (v) 200/o of total mini-

mum wage for fuel, lighting and

other miscellaneous items. [p. 136 G

.

D-G]

Express Newspapers (P) Ltd. v. Union of India, [1959) SCR 12,

followed. '

Standard Vacuum Refining Co. of India v. Its Workmen d Anr ..

(1961) 3 ~CR ~36, relied on. H

132 SUPREME COURT REPORTS [1991] SUPP. 2 S.C.R.

A Keeping in view the socio-economic aspect of the wage struc-

ture the following additional component has also to be taken into

account:

"(vi) children education, medical requirement, minimum recreation

including festivals/ceremonies and provision for old ag"e, mar-

B riages etc. should further constitute 25% of the total minimum

wage."

The wage

structure which approximately answers these six com­

ponents

is nothing more than a minimum wage at subsistence level.

[p. 137 A-CJ

C 2.3 In spite of the promise by the Constitution of a living wage

D

E

F

G

H

and a 'socialist' framework to enable the working people a decent

standard of life, industrial wage, looking as a whole, has not yet

risen higher

than the level of minimum wage. [p. 137 D-E]

3.1 Purchasing power of today's wage cannot be judged by

making calculations which

are

solely based on 30/46 years old wage­

structure. The only reasonable way to determine the category of

wage structure is to evaluate each component of the category con­

cerned in the light of the prevailing prices. There has been sky­

rocking rise in the prices and the inflation

chart is

going up so fast

that the .only way to do justice to the labour is to determine the

money value of various components of the minimum wage in the

context

of today. (p. 146 F-H]

3.2 In

the instant case, the Company neither pleaded nor ar­

gued before the Tribunal that its financial position had so much

deteriorated that it was not possible for it to bear the burden of the

slab system of DA; nor did the Tribunal deal with this aspect of the

matter while considering the demand' of the Company for re-struc­

turing the DA scheme. (p. 144 F-G)

· 3.3 Although the DA paid by the Company was somewhat higher

than

what

w~s · being paid by the other similar industries in the

region, yet it .ci)uld not be shown that what was being paid by the

Company was higher than what would be required by the concept of

need based minimum wage. In any case

there is a

very long way

between the need based wage and the living wage. (p. 145

AB)

4. The Tribunal and the High Court acted in total oblivion of

the

legal position. Consequently, manifest injustice has been caused

,,.

.

-.

' (

..

. ,

~

WORKMEN v. MANAGEMENT OF REPTAKOS BRETT. [KULDIP.SINGH, J,] 133

to the workmen by the award. It can, therefore, not be said that

jurisdiction under Art. 136 stands repelled. [p. 145 CD]

Shaw Wallace & Co. Ltd. v. Workmen, [1978] 2 SCC 45 & The

Statesman Ltd.

v. Workmen, [1976] 3

SCR 228, referred to.

Tbe

Tribunal was not justified in abolishing the slab system of

DA which had stood the test of time for almost 30 years and had

been approved by variou~ settlements between the parties and as

such the award

of the

Tribunal and the High Court judgments were

unsustainable. [pp.

144 AB; 145 DE]

Buckingham and Carnatic Mills Ltd. v. Their Workers, [1951] 2

L.L.J. 314 & Good

Pastor Press v. Their Workers, [1951] 2 L.L.J.

718, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4336 (NL)

of 1991, ·

I

From the Judgment and Ord.!r dated 14.9.1989 of the Madras High

Court in Writ Appeal

No. 697of1989.

M.KRamamurthy, Mrs. Chandan Ramamurthy and M.A.Krishnamurthy

for the Appellants.

F.S.Nariman, R.F.Nariman, T.S.Gopalan, Raian Karanjiwala, Mrs.

Manik Karanjiwala, Mrs. V.S.Rekha and

Sajai Singh for the Respondents.

The Judgment

of the Court was delivered by KULDIP SINGH, J. Special leave granted.

The Reptakos Brett

& Co. Ltd. (hereinafter called the 'Company') is

engaged in the manufacture

of pharmaceutical and dietetic speciality products ·

and is having three units, two at Bombay and one at Madras. The Madras

factory, with which

we are concerned,

·.vas set-up in the year 1959. The

Company on its own provided slab system

of Dearness Allowance (DA)

which means the

DA paid to the workmen was

liuked to cost of living

index as well as the basic wage. The said double-linked

DA Scheme was

included in various settlements between the Company and the workmen

and remained operative for about thirty years. The question for

0ui con­

sideration

is whether the Company is entitled to re-structure the DA scheme

by abolishing the slab system and substituting the same by the

Scheme-prejudicial to the workmen-on the ground that the slab system

A

B

c -

D

E

F

G

H

134 SUPREME COURT REPORTS · (1991) SUPP. 2 S.C.R.

A bas i;esulted in over-neutralisation thereby landing the workmen in the

bigh~wage island.

" The first settlement between the Company and the workmen was

... entered into on August 11, 1964. While accepting the double-linked DA it

further provided variable DA limited to the cost of living index up to

B 5.41-5.50. Further relief was given to the workmen in the settlement dated

July 18, 1969 when the limit

on the variable DA was removed.

_The

Company revised the rates of DA on August 7, 1971. Thereafter, two

more settlements were entered into on July 4, 1974, an1 January 4, 1979,

respectively. Slab system with variable DA continued to

be the basic

,,.....

constituent of the wage-structure in the company from its inception.

c

The position which emerg~s is that in the year 1959 the Company on

its own introduced slab system of DA. In 1964 in addition, variable DA to

.r-

the limited extent was introduced but the said limit was removed in the

)

·-

1969 settlement. -The said DA scheme was reiterated in the 1979 settle- >

D

ment. It is thus obvious that the slab system of DA introduced by the

Company in the year 1959 and its progressive modifications by various

settlements over a period

of almost thirty years, bas been consciously

accepted by the parties and

it bas become a basic feature of the wage

structure in the Company.

E

The workmen raised several demands in the year 1983 which were

referred for adjudication to the Industrial Tribunal, Madras. The Company

in tum made counter demands which were also referred to the said Tribu- .

nal. One of the issues before the Tribunal was as under:-

"Whether the demand of the Management for re-structuring of r

F

the dearness. allowance scheme is justified, if so, to frame a

scheme?"

The Tribunal decided the above issue in favour of the Company and

by its award dated October 14, 1987 abolished the existing slab system of

DA and directed that in future dearness allowance in the Company, be

G linked only to the cost of living index at 33 paise per point over 100

points of the Madras City Cost of living Index 1936 base. The Tribunal

/ disposed of the two References by a common award. The Company as

well as the workm~n filed separate writ petitions before the Madras High I

Court challenging the award of the Tribunal. While the two writ petitions I

were pending the parties filed a joint memorandum dated June 13, 1988,

H before the High Court in the following terms:

WORKMEN v. MANAGEMENT OF REPTAKOS BRETT. [KULDIP SINGH, J,] 135

"In view of the settlement dated 13.5.1988 entered into be- A

tween the parties, a copy of which is enclosed, both the parties

are not pressing their respective writ petitions except with re-

gard

to the issue relating to re-structuring of dearness allow­

ance."

The learned Single Judge of High Court upheld the findings of the

Tribunal on the sole surviving l.ssue and dismissed the writ petition of the · B

workmen. The writ appeal filed by the workmen was also dismissed by

the High Court

by its judgment dated September 14, 1989. The present

appeal

by special leave is against the award of the Tribunal as upheld by

the High Court.

-

Mr .. M.K. Ramamurthy, learned counsel for the appellantS has raised

the following points for our

cosideration:-

(i) The Tribunal and the High Court grossly erred in taking Rs.

26

c

as a pre-war wage of a worker in Madras region and, on that

arithmetic, reaching a conclusion that the rate

of neutralisation D

on the basis of cost of

living index in December 1984 was 192

per cent.

(ii) Even if it is assumed that there was over-neutralisation-unless

the pay. structure of the workmen is within the concept of a

. 'living wage' and in addition it is proved that financially the

Company

is unable to bear the

burden-the existing pay struc-E

ture/DA scheme cannot be revised to the prejudice of the work-

men.

(iii) In any case the DA scheme-which was voluntarily introduced

by the Company and reiterated in. various settlements cannot be

altered

to the determent of the

workmen."

Before the points are dealt with, we may have a fresh-look into

various concepts

of wage structure in the industry. Broadly, the wage

structure can be divided into three

categories-the basic

"minimum wage"

which provides bare subsistence and is at poverty-line level, a little above

is the "fair wage" and finally the "living wage" which comes at a comfort

level.

It is not possible to demarcate these levels of wage

structure with

any precision. There are, however, well accepted norms which broadly

distinguish one category

of pay structure from another. The Fair Wages

Committee,

in its

report published by the Government of India, Ministry

of Labour, in 1949, defined the ''.living wage" as under: ·

F

G

"the living wage should enable the male earner to provide for

himself and his family not merely the bare essentials Qf food, · H

A

B

c

D

E

F

G

136

SUPREME COURT REPORTS (1991) SUPP. 2 S.C.R.

clothing and shelter but a measure of frugal comfort including

education for the the children, protection against illhealth, re­

quirements

of essential social needs, and a measure of insur­

ance against the more important misfortunes including old

age."

"The Committee's view regarding "minimum wage was as-under:

"the minimum wage must provide not merely for the bare

sustenance

of life but for the preservation of the efficiency of

the worker. For this purpose the minimum wage must also

provide for some. measure

of

education, medical requirements

and amenities."

The Fair Wages Committee's Report has been broadly approved by

this Court in

Express Newspapers (P) Ltd. v.

Union of India, (1959] SCR

12 and Standard Vacuum Refining Co. of India v. Its Workmen and Anr.,

[1961] 3 SCR 536.

The Tripartite Committee

of the Indian Labour Conference held in

New Delhi in 1957 declared the wage policy which was to be followed

during the

Second Five Year Plan. The Committee accepted the following

five nonns for the fixation of 'minimum wage':

"(i) In calculating the minimum wage, the standard working class

family should be taken to consist

of 3 consumption units for one

earner; the earnings

of women, children and adolescents should

be disregarded.

(ii) Minimum food requirement should be calculated on the basis of

a net intake of calories, as recommended by Dr. Aykroyd for an

average

1!;tdian .adult of moderate activity.

(iii) Clothing requirements should be estimated at per capita con­

sumption

of 18

yarCls per annum which would give for the aver­

age workers' family

of four, a total of72 yards.

(iv) In respect

of housing, the rent corresponding to the minimum

area provided for under Government's Industrial Housing Scheme

should be taken into consideration in fixing the minimum wage.

(v) Fuel, lighting and other 'miscellaneous' items

of expenditure should

constitute

20% of the total minimum wage."

This Court in Standard Vacuum Refining Company's case (supra)

has r~ferred to the above norms with approval.

H The concept of 'minimum wage' is no longer the same as it was in

•r--

,,.

_I

WORKMEN v. MANAGEMENT OF REPTAKOS BRETT. [KULDii> SINGH, J,] 137

1936. Even 1957 is way-behind. A worker's wage is no longer a contract

between an employer and

an employee. It has the force of collective

bargaining under the labour laws. Each category

of the wage structure has

to be tested at the anvil of social justice which is the live-fibre of our

society today. Keeping in view the

socio-economic aspect of the wage

structure, we are

of the view that it is necessary to add the following

additional component

as a guide for fixing the minimum wage in the

industry:- "(vi) children education, medical requirement, minimum recreation

including festivals/ceremonies and provision for old age, mar­

riages etc. should further constitute 25% of the total minimum

wage."

The wage structure which approximately answers the above six com­

ponents is nothing more than a minimum wage at subsistence level. The ·

employees are entitled to the/minimmn wage at all times and under all

circumstances.

An employer 'who' cannot pay the minimum wage has no

right to engage labour and no justification to run the industry.

A living wage has been promised

to the workers under the constitu­

tion. A 'socialist' framework

to enable the working people a decent

stand­

ard of life, has further been promised by the 42nd Amendment. The work­

ers are hopefully looking forward to achieve the said ideal. The promises

A

B

c

D

are pilling-up but the day of fulfilment is nowhere in sight. Industrial E

wage--looking as a whole-has not yet risen higher than the level of

minimum wage.

Adverting

to the first point raised by Mr. Ramamurthy it would be

convenient to quote--from the award-the contentions of the Company

and the findings reached by the Tribunal. The Company's case as noticed

F

by the tribunal is as under:-

"It is stated that the pre-war wage of a worker in the Madras

Region was Rs.26. It is evidenced by the decision

of the La-

bour Appellate Tribunal reported in

1951 II L.L.J. page 314

(Buckingham and Carnatic Mills v. Their workers) and 1951 II G

L.L.J. page 718 (Good Pastor Press v. Their workers). It is

contended that taking the pre-war ininimum wage of worker at

Madras being Rs. 26 per-month equivalent to

100 per cent

neutralization the rate

of Dearness Allowance at 26 paisa for

every point above

100 points of cost of living index would

work out to l 00 per cent neutralisation. On the above basis at H

A

B

c

D

E

F G

'H

138 SUPREME COURT REPORTS [1991) SUPP. 2 S.C.R.

2780.points of cost of living index in December 1984, the 100

per cent neutralised wage should be Rs. 722.80 (basic wage of

Rs. 26 plus dearness allowance Of Rs. 696.80). As against the

above wage a workman

of lower grade in the Petitioner-Com­

pany in December 1984

was getting a total wage ofRs. 1,394/­

comprising

of

basic plus dearness allowance plus house rent

allowance and the rate

of neutralisation of dearness allowance

correspondingly

works out to 192 per cent."

The Tribunal accepted the above contentions of the Company. The

evidence produced by the Company, regarding prevailing

DA schemes in

the comparable industries in the region, was also taken into consideration.

The Tribunal finally decided as under:

"Taking an overall view of the rate of dearness allowance paid

by these comparable concerns in the region and the higher

total emoluments received by the workmen in this establish­

ment, the slab system

of dearness allowance now in existence

shall stand abolished and in

future,

dearness allowance in the

Petitioner-Management would be linked only to the cost

of

living index at

33 paise per point over 100 points of the Ma­

dras City Cost

of Living

Index 1936 base and it shall be effec­

tive from the month in which the award is published in the

Tamil Nadu Gazette."

The learned Single Judge of the High Court upheld the above find­

ings

of the Tribunal. The Division Bench of the High Court, in writ

appeal, approved the award and the judgment

of the learned Single Judge

in the following

words-

"The learned j"!J(f ge has observt:d that the counsel for the Man­

agement had taken him !hrough all the relevant materials which

were filed in the form ofExhibitsbefore the Tribunal in order

to show that the matter

of over neutralisation cannot be in

dispute. Thus the

learneti Judge proceeded on the basis that

there is over neutralisation which called for devising a scheme

for,reSt.ructuring lh~,:wage scale. This finding cannot be inter­

.fer~q With as no irtaterials have been placed before us by the

learned counsel for the _appellant to show that the exhibits

which were perused

by the learned Judge do not support his ,conclusion. Hence, we hold that the contention that there are

no compelling circumstances in this case to revise the pattern

of dearness allowance is unsustainable."

WORK.MEN v. MANAGEMENT OF REPTAKOS BRETT. [KULDIP-SINGH, J,) 139

According to the Company the only purpose of DA is to enable a A

worker-,-in the event of a rise in cost of living----tO purchase the same

amount bf goods of basic necessity as before. In other words the DA iS--to­

neutralise the rise in prices. the said purpose can be achieved by providing

maximum

of

100 per cent neutralisation. Accepting the calculations of the

Company based on

Rs. 26 being the pre-war (1936) minimum wage in

Madras region the Tribunal came to the finding that there was 192 per

B

cent neutralisation.

The Tribunal accepted Rs. 26 as the pre-war minimum wage in

Madras region on the basis

of the decisions of Labour Appellate Tribunal

oflndia in Buckingham and Carnatic Mills Ltd. v. Their

workers, [1951] 2

L.L.J. 314 and

Good Pastor Press v. Their

workers, [1951] 2 L.L.J. 718. C

In Buckingham case the appellate tribunal came to the conclusion

that the basic wage

of the lowest category of operatives on the living cost

of index of the year 1936 was Rs. 28.

The said wage included Rs.16~ as

expenses on diet. The workers relied upon the. Textile Enquiry Commit­

tee's report to claim

25% addition to the diet-expenses. The Appellate D

Tribunal rejected the report on the ground that the recommendations in

the said report were for the purpose of attaining the standard of "living

wage" and not of 'minimum wage'. The Appellate Tribunal stated as

under:~

-"The Union however, contends that Dr. Akroyd revi.sed his E

opinion when submitting a specially prepared note to assist the

Textile Enquiry Committee, Bombay ofwbich

Mr. Justice Divatia

was the Chairman, where he is said to have stated that

25 per

cent more will have

to be added for obtaining a balanced diet

for a minimum wage earner. The report

of that Enquiry Com­

mittee, which was published in

1940, however, shows that Dr. F

Akroyd added 25 per cent as the costs of the extra items to his

standard menu such as sugar etc., for the purpose

of attaining

the standard menu

of 'living wages' (final report of the Textile

Labour Enquiry Committee

1940, Vol.II, pages 70 to 71). There­

fore, for the purpose

of fixing 'minimum wages' that 25 per

cent is not to be

added." G

The question as to whether the recommendations Of Textile Enquiry

Committee were in relation to 'living wage' or 'minimum wage' came for

C'?nsideration before this Court in Standard Vacuum case (supra). This

Court held as under:

"It is obvious that the Commitfee was really thinking-of what H

A

B

c

D

140 SUPREME COURT REPORTS (1991) SUPP. 2 S.C.R.

is today described as the minimum need-based wage, and it

found that judged by the gaid standard the current wages were

deficient.

In its report the Committee has used the word

'mini­

mum' in regard to some of the constituents of the concept of

living wage, and its calculations show that it did not proceed

beyond the minimum level in respect

of any of tlie said

con­

stituents. Therefore, though the expression 'living wage stand­

ard' has been used by the Committee in its report we are

satisfied that Rs. SO to Rs. SS cannot be regarded as anything

higher than the need based minimum wage

at that time. If that

be the true position the whole basis adopted by the appellant

in

making its

calculations turns out to be illusory."

This Court, therefore, in Standard Vacuum case came to the conclu­

sion that the Textile Labour Committee Report in the year 1940 in its

calculations did not proceed beyond the minimum level

of the wage

struc­

ture. It was further held that Rs. 50 to Rs. SS was the need-based mini­

mum wage in the year 1940.

The Appellate Tribunal in Buckingham case, therefore misread the

Textile Committee Report and was not justified in rejecting the same on

the ground that it related to the category

of 'living wage'

We are

of the view that it would not be safe to accept the findings of

E the Appellate Tribunal in Buckingham case as the basis for fixing the

wage structure

to the prejudice of the workmen. This court in Standard

Vacuum case (supra) has further· held that in Bombay the minimum wage

in the year 1940 was Rs.SO to Rs.SS. On that finding it is not possible to

accept that the minimum wage in the year 1936 in Madras region was

Rs.26/28. So far as the Good Pastor Press case is concerned the question

F

of determining the minimum wage in pre-war 1936 was not before the

Appellate Tribunal. It only mentioned the fact that Rs.26 was held

to be

so

by some of the subordinate tribunals. There was no discussion at all on

this point. The Tribunal's

relian~ on this case was wholly misplaced.

In any case we are of the opinion that purchasing power of today's

G wage cannot be judged by making calculations which are solely based on

30/40 years old wage structure. The only reasonable way to determine the

category

of wage structure is to evaluate each component of the category

concerned in the light

of the prevailing prices.

Tuer~ has been sky-rocking

rise in the prices and the inflation chart

is going up so fast that the only

way to do justice to the labour is to determine the money value of various

H components of the minimum wage.in the context of today.

WORKMEN v. MANAGEMENT OF REPTAKOS BRETT. [KULDIP SINGH, J,) 141

We may now move on to the second and third point raised by Mr. A

Ramamurthy. We take up these points together. Mr. F.S. Nariman, learned

counsel appearing

for the Company, contended that the existing DA scheme

can

be revised even to the prejudice of the workmen and for that proposi-

tion he relied upon the judgment

of this Court in Mis. Crown Aluminium

works

v. Their

Workmen, (1958) S.C.R. 651. Mr. Ramamurthy has, how­

ever, argued that even

if the contention of Mr. Nariman is accepted in B

principle, the Company has not been able to make-out a case for such a

revision.

In Mis. Crown Aluminium Works case this Court speaking through

Gajendragadkar, J.(as

he then

was~ held as under:-

"The ·question posed before us by Mr. Sen is: Can the wage

structure fixed in a given industry be never revised to the

prejudice

of its workmen? Considered as a general question in

the abstract it must

be answered in favour of Mr.

Sen. We do

not think it would

be correct to say that in no conceivable

circumstances can the wage structure

be revised to the preju-

dice

of workmen. When we make this observation, we must

add that even theoretically no wage structure can or should

be

revised to the prejudice of workmen ifthe structure in question

falls in the category

of the bare subsistence or the minimum

wage.

If the wage structure in question falls in a higher cat­

egory, then it would

be open to the employer to claim its

revision

even to the prejudice of the workmen provided a case

for such revision

is made out on the merits to the satisfaction

of the tribunal. In dealing with a claim for such revision, the

tribunal may have to consider, as

in the

prese~t case whether

the employer's financial difficulties could not

be adequately

met by retrechment in personnel already effected by the em­

ployer and

sanctioned by the tribunal. The tribunal may also

enquire whether the financial difficulties facing the employer

are likely

to be of a short duration or are going to face the

employer

for a fairly long time.

!tis not necessary, and would

indeed

be

very difficult, to state exhaustively all considera-

tions which may

be relevant in a given case. It would, how­

ever,

be enough to observe that, after considering

all the rel­

evant facts,

if the tribunal is satisfied that a case for reduction

in the wage structure has been established then it would

be

open to the tribunal to accede to the request of the employer to

make appropriate reduction in the wage structure, subject to

such conditions

as to time or otherwise that the tribunal may

deem fit or expedient

to

impose."

c

D

E

F

G

H

A

B

c

D

E

F

G

H

142

SUPREME COURT REPORTS [1991] SUPP. 2 S.C.R.

The above dicta was reiterated by this Court in Ahmedabad Mills

Owners, Association etc. v. The Textiles Labour Association, [1961) 1

SCR 382 wherein this Court through Gajendragadkar, CJ, laid down as

under:-

"The other aspect of the matter which cannot be ignored is that

if a fair wage structure is constructed by industrial adjudica­

tion and in course

of time, experience shows that the employer

cannot bear the burden

of such wage structure, industrial adju­

dication

Ca.n, and in a proper case should revise the wage

structure, though such revision may result in the reduction

of

the wages paid to the employees ................... .if it appears that

the employer cannot really bear the burden

of the increasing

wages bill industrial adjudication, on principle, cannot refuse

to examine the employer's case and should not hesitate

to give

him relief if it is satisfied that if such relief is not given, the

employer may have to close down his business ................ This

principle, however, does not apply to cases where the wages

paid

to the

employees are no better than the basic minimum

wage.

If, what the employer pays to his employees is just the

basic subsistence wage, then it would not be open to the em­

ployer to contend that even such a wage is beyond his paying capac~ty."

The ratio which emerges from the judgments of this Court is that the

management can revise the wage structure to the prejudice

of the work­

men in a case where due to financial stringency it is unable to bear the

burden

of the existing-wage. But in an industry or employment where the

wage structure is

at the level of minimum wage, no such revision at all, is

permissible

-not even on the ground of financial stringency. It is, there­

fore, for the management, which is seeking restructuring

of DA scheme to

the disadvantage of the workmen to prove to the satisfaction of the tribu­

nal that the wage-structure in the industry concerned is well above mini­

mum level and the management is financially not in a position to bear the

burden

of the existing wage structure.

Mr. Ramamurthy further relied upon this Court's judgment

in

Mohthl)i-

. Rated workmen at the Wada/a factory of the Indian Hume Pipe Co. Ltd. v.

Indian Hume Pipe Co. Ltd., Bombay, [1986) 2 S.C.R. 484 and contended

that an employer cannot be permitted

to abolish the DA scheme which has

worked smoothly for almost thirty years on the plea that the said

Sfheme

is more beneficial than the DA schemes adopted by other indusJries{in the

region. In the

Indian Hume Pipe Co. Ltd case the management

ple~ed

WORKMEN v. MANAGEMENT OF REPTAKOS BRETT. [KULDIP SINGH, J,) 143

that the dearness allowance enjoyed by the workmen was so high in A

certain cases that neutralisation was

at rates much higher than

100%. It

was further contended that the management did not have the capacity to

pay the slab system of DA and in the event of a claim for similar DA by

other workmen the management might have to .close down the factories.

Khailid, J. spoke for the court as under:-

"We thought it necessary to refer to the various awards read by

Mr.Pai only for the completeness of the judgment. It has to be

borne in mind that in most

of these cases, awards were passed

at the instance

of the employees when demands were made for

raising the dearness allowance paid to them. Here, we have the

B

~ of the employer trying to get over a system of dearness C

allowance which had worked smoothly for 18 years, on the

specious plea that

at the time the slab system was introduced,

it was not in the expectation

of anyone that the cost of price

index would spiral up so much as to make it impossible for the

company to pay according to this scheme. From the materials

. available we do not find that this plea can be accepted. The D

records 'procduced show that despite this system of dearness

allowance the Company

has been making profits and has been

improving its position year by year ............. we do not think it

necessary to deal

at length about the evolution of the concept

of dearness allowance. Suffice it to say that this Court has,

often times, emphasised the need for a living wage to work-E

men instead

of a subsisting wage. It is indeed a

·matter of

concern and mortification that even today the aspirations of a

living wage for workmen remain a mirag~ and a distant ·

dream. Nothing short of a living wage can be a fair wage. It

should be the combined effort of all concerned including the

Courts to extend

to workmen a helping hand so that they get a F

living wage which would keep them to some extent at least

free from want.

lt is against this background that a claim by

employers to change the conditions

of service of workmen to

their detriment

has to be considered and it is against this back­

ground that we have considered the award review. We are not

satisfied that a case

has been made out on the facts available G

for a change ................... The question is often asked as to whether

it would be advisable for Tribunals and Courts to revise the

wage structure

of workmen to

their prejudice when a dispute

arises. Normally the answer would be in the negative. Tribu­

nals and Courts can take judicial notice of one fact; and that is

that the wages

of workmen, except inexceptionally rare cases, H

A

B

c

D

E

144

SUPREME COURT REPORTS (1991) SUPP. 2 S.C.R.

fall within the category of mere "subsisting wages". That be­

ing so, it would be inadvisable to tinker with the wage struc­

ture

of workmen except under compelling circumstances."

We agree with Mr. Ramamurthy that the DA

scheme-which

had

stood the ·test of time for almost thirty years and had been approved by

various settlements between the

parties-has been unjustifiably abolished

by the Courts below and as such the award

of the Tribunal and the High

Court Judgments are unsustainable.

Mr. Nariman has also relied

on the judgment of this Court in Killick

Nixon Ltd. v. Killick & Allied Companies Employees

Union, [1975] Suppl.

S.C.R. 453 to support the findings of the Tribunal and the High Court.

The said case d()t)S not lay down that in all cases the slab system of DA

should be abolished to the prejudice

of the workers. In the said case this

Court

on the facts of the case came to the conclusion that the employer

had made out a case for putting a ceiling on the dearness allowance. The

ratio

of that case cannot be extended to interfere with the existing DA

schemes in every case where such schemes are beneficial to the

wofkmen.

Mr. Nariman has invited our attention to para 20 of the Award

wherein the tribunal has held as under:

"These figures as detailed in Ex.M-13 would establish that the

company is not in a financial position to bear the additional

burden on account

of increased

wages."

From the above finding it was sought to be shown that the Company

has proved to the satisfaction of the Tribunal that financially it was not in

a position to bear the burden

of the existing DA scheme. We do not agree

with the learned counsel. The Tribunal gave the above finding in the

F reference made on behalf of the workmen asking for bonus increase and

various other monetary benefits. While rejecting the demands of the

work­

men the Tribunal gave the above finding which related to the additional

burden accruing

in the event of acceptance of the workers' demands. The

Tribunal nowhere considered the financial position

of the company

vis-a­

vis the existing DA scheme. The Company neither pleaded nor argued

G before the Tribunal that its financial position had so much deteriorated

that

it was not possible for it to bear the burden of the slab system of DA.

The Tribunal has not dealt

with this aspect of the matter while considering

the demand

of the Company for re-structuring the DA scheme.

It has been pleaded by the company that its workmen are

in a high

H wage island and as such the revision of DA scheme was jutified. The

...

.WORKMEN v. MANAGEMENT OF REPTAKOS BRETT. [KULDIP SINGH, J,] 145

Company also produced evidence before the Tribunal to show that compa-A

rable concerns in the region were paying lesser DA to its workmen. On

the basis of the material produced before the Tribunal all that the Com­

pany has been able to show is that the DA paid by the Company is

somewhat higher than what is being paid by the other similar industries in

the region. There is, however, no material on the record to show that what

is being paid by the company is higher than what would be required by B

the concept of need based minimum wage. In any case there is a very long

way between the need based wage and the living wage.

Mr. Nariman reminded us of the limits on our jurisdiction under

Article 136 of the Constitution of India and relying upon Shaw Wallace &

Co. Ltd. v. Workmen, [1978] 2 SCC 45 and The Statesman Ltd. v. Work-C

men, [1976] 3 SCR 228 contended that so long as there is "some ba3is,

some material to validate the award" the "jurisdiction under Article 136

stands repelled". The Tribunal and the High Court, in this case, has acted

in total oblivion of the legal position as propounded by this court in

various judgments referred to by us. Manifest injustice has been caused to

the workmen by the award under appeal. We see no force in the conten-D

tion of the learned counsel.

In view of the above discussion we are of the view that the Tribunal

was not justified in abolishing the slab system of DA which was operating

in the Company for almost thirty years. We allow the appeal and set asid~

the award of the Tribunal and the judgment of the learned Single Judge in E

the writ petition

and of the Division Bench in the Writ Appeal. The

reference of the Company on the issue of re-structuring of

the dearness

allowance

is declined and rejected. The Appellant-workmen shall be enti-

tled to their costs throughout which we assess at Rs.

25,000.

R.P . Appeal allowed.