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Petitioner: J GOKAK MILLS LTD. VS Respondent: INDUSTRIAL TRIBUNAL, MYSORE AND OTHERS
Court Name: Mysore High Court Judge(s): K. R. Gopivaliabha Iyangar, B. V. Venkataswami Title: J GOKAK MILLS LTD. vs INDUSTRIAL TRIBUNAL, MYSORE AND OTHERS Case No.: Writ Petition No. 2340 of 1967 Date of Judgment:1968-11-22 Reported As: 1970 PLC 685 Result: petition is allowed
JUDGMENT
JUDGMENT GOPIVALLABHA IYENGAR, J.-This petition under Articles 226 v. and 227 of the. Constitution of India is one by the Management of the Gokak Mills Ltd., Gokak Falls, praying that the award made by the Industrial Tribunal in Mysore, Bangalore, dated 22My August, 1967, in Industrial Dispute No. 12 of 1966 be quashed. Got The Industrial Tribunal in Mysore; Bangalore, is impleaded as the first respondent. The other four respondents are the Trade Unions representing the interests of the employees of the petitioner. The second, third and the fifth respondent are respectively represented by Advocates Messrs A. B. Marliappa, K. T. Sule and Mandappa. The fourth respondent was, represented by its President. The second respondent-Union issued a notice dated 16th July, 1964, to the petitioner terminating the agreement between the parties, relating to dearness allowance as the circumstances had changed. A demand was made that the dearness allowance should be given to the workers of the Gokak Mills as per the rate of dearness allowance of the Sholapur living index. Another notice was issued on 22nd October 1964, reiterating the demand as above-mentioned and asking the mills to consider the claim from 16th July, 1964, and also to pay the arrears; but later, on 2nd January, 1965, the second respondent Union made a specific demand to the effect that the dearness allowance of every employee should be raised and made equal with the dearness allowance of the Sholapur Mills on the basis of the living index and the demand made should be considered with effect from 1st. January 1965. The Management having declined to recognise the demand, the matter went up for conciliation before the Assistant Labour Commissioner and Conciliation Officer, Hubli. On 19th February 1966, the Government of Mysore made a reference of the dispute under clause (d) ofnd
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subsection (1) of section 10 of the Industrial Dispute Act, 1947, to the Industrial Tribunal at Bangalore. The points of dispute referred are in the following terms:- "Whether the Gokak Girni Rashtriya Mazdoor Sangh. Gokak Falls, Gokak, are justified in demanding dearness allowance of every employee to be raised and made equal to the dearness allowance given in Sholapur on the basis of the cost of living index with effect from 1st January, 1965? "If not, to what quantum of increase or relief are the employees entitied to?" With respect to this reference the Unions submitted a Statement of Claim and the Mills submitted their counter-statement. In the Statement of Claim mention is made that the existing rate of deafness allowance is fixed by an award of the Industrial Court, Bombay, in I. C. No. 82 of 1949: This award is stated to have been made in, terms of a Memorandum of Settlement. It was agreed- between the parties that the dearness allowance was to be paid at 1.25 pies per point rise per worker per day over the August 1939, Sholapur working class cost of living index number. 73. This award was made on 18th January 1950, The company, it is alleged, is engaging about 6;000 workers. The basic minimum wage was fixed as far back as in 1950 at Rs. 21-12 pies and the dearness allowance was fixed as above-- mentioned. It is submitted that the wages and the dearness allowance payable to the workmen of the Gokak Mills were linked with Sholapur. It is not disputed that the dearness allowance paid at Sholapur to the employees similar to those of the Gokak Mills was 1.75 pies leer point rise per day over 73 points-'cost of living index. This, it is submitted, works out at 66.66 % neutralisation in the case of Sholapur Mills. It is seen from the counter statements that the percentage of neutralisation at Gokak is 58.4 per cent. The labour Unions referred to as the first party .set out in their statement comparative figures of the Gokak Mills and the mills in Sangli area, with reference to capital, reserves, profit or loss for a period of five years from 1954. They also state that the rate of dearness allowance at, Madhavanagar Cotton Mills was fixed at 91.66 % of Sholapui dearness allowance by an award from 1st January 1951 and it was revised again to 92 % with effect from 1st January 1960, They, complain that the conditions of living at the Gokak Mills are much harder than those at the other mills referred to above. They state that the company has made huge profits, and, therefore, they are liable to meet their demands. The second party, viz. the Gokak Mills raised a preliminary objection stating that the Government of India, by a resolution dated 12th August, 1964, have set up a second Wage Board for the Cotton Textile Industry in the country, to consider the question of further revision of the wage structure in the industry and therefore the entire reference is bad and that the first party is estopped from claiming any higher dearness allowance. So far as this contention is concerned, Sri V. L. A Narasimha Moorthy, the learned Advocate for the petitioner, stated that this is not a case of estoppel,as understood in law, but that the Tribunal should have considered the advisability of dealing with -the reference in view of the constitution of the Wage Board ,by the Government of India or could have given certain directions with reference to the expected report of the Board. The second party contested the claim of the employees on several grounds. They state that the dearness allowance is an integral part of the total wages paid to the employees and therefore any demand for increase in dearness allowance in isolation without taking into consideration the totality of the wages including fringe benefits, is entirely, unwarranted. They state that the total wages paid to the employees at Gokak Mills including the fringe benefits are fair and adequate. It was admitted that the company is engaging about 6,000 workers. It was further pleaded that it has a colony of its own, primarily for workmen and for its supervisory and managing staff. They deny that the conditions of the workmen are miserable as pleaded by the first party and the tenements provided for them are dirty or unsanitary. Regarding the wage structure of the workers of Gokak Mills, it is stated that there was an adjudication in I. C. No. 31 of 1955 in which the Industrial Court of Bombay held that the wage of Rs. 26 for Sholapur is generous and dismissed the said petition, while
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finding that Rs. 21.12 for Gokak is fair and reasonable. The Management denied that the petitioner company was linked with Sangh, Miraj and Madhavanagar Mills by the previous Tribunals. The company admitted that the rate of dearness allowance at Sholapur was 1:75 pies per point rise per day, whereas Gokak it is 1'25 pies per point rise per day. They further stated that though the company is employing 6,000 workers, including substitutes, the average employment fluctuates between 4,800 and 5,200 per day. They submit that most of the workers come from the nearby villages where the cost of living is much cheaper than that obtaining at Gokak Falls, where the mills are.-located. While admitting that the prices of essential commodities have increased in general, it is submitted that the dearness allowance paid to the workers has also been increasing month after month. In 1950 the Sholapur working class cost of living index number was 298, whereas the cost of living index number shot up to 512. The company also contended that after reorganisation of States and from 1st November 1956, Gokak Falls area which is now in the Mysore State can be compared with textile units in Mysore State and not with any other mills in other areas. The company also states that as a result of the recommendationsthe Lakadawalla Committee, the Sholapur cost of living index was revised and the company adopted the 'revision and paidworkers dearness allowance at such revised rate. They contend that the total emoluments that the workers at Gokak Mills get are fair and when compared to other industries are on a higher side. It is alleged that in addition to dearness allowance the workers are getting reasonable bonus also. The company adds that the present rate of dearness allowance linked to Sholapur working class cost of living index number is more than adequate. They further state that any increase in the dearness allowance: will as a result jeopardise the company's position and will affect, its competitive capacity apart from the fact that it will create unnecessary dissatisfaction in the local area where the wage rates are very much lower than those grand to the company's workmen. Regarding the financial position of the company they deny that the company is able to build up crores of rupees as reserves. They further state that the company has expanded its activities in various ways to meet the competition in the industry and had to float debentures in 1957 and increase its capital in 1961. The company further states that most of the profits earned have been invested back in the company's activities and shareholders are getting; a small dividend subject to deduction of taxes. The true position of tax, company is said to be reflected in the balance-sheet and the profit and loss accounts of the company with the development programmes. It is submitted that the Sangh is not justified, in its demands nor is the company is a position to meet demands. In the reply filed by the first party, it is contended that the audited statement of accounts of the company prove the financial stability of the company. It was alleged that the increase in dearness allowance does not meet the rise in prices of the commodities every month. It was submitted that the industry---cum-region basis does not apply to the second party because region is not defined. Comparing Gokak Falls with Bangalore, it is mentioned, the workmen working in the textile industry in Bangalore get 20 paise for every point rise in the cost of living index over and above 100 and the workmen, in Bangalore working. in the textile industry get Rs. 128 by okay of dearness allowance alone per month and they are justified in comparing their wage-- structure with their counterparts in Bangalore. With reference to the preliminary objection raised by the second party, the Tribunal framed an issue as follows:- "Are the first-party workmen estopped from claiming clear--ness allowance to every employee by reason of the fact that they have accepted the benefits from the recommendations of the first Wage Board and by reason of the fact also that the Government of India have appointed a second Wage Board to go into the question?" It gave a finding negativing the second party's contention and holding that the first-party-workers were not estopped from claiming the dearness allowance to their employees, by reason of the fact
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that they have accepted the benefits of the First Wage Board recommendation and by reason also that the Government of India have appointed the Second Wage Board to go into the question. The first--party examined three witnesses, while the second party examined only one witness the parties have filed numerous documents and statements as exhibits in the case, including the balance-sheets of the company from the year 1961 to 1966. In this Court the parties have produced the balance-sheet for the year 1967 also. The Tribunal passed the award on 22nd August 1967, holding that the Gokak Girni Rashtriya Mazdoor Sangh, Gokak Falls, is entitled to dearness allowance with effect from 1st January 1965, at the rates paid to the Sholapur Mill employees as indicated above, i.e. at Rs. 1.75 pies per day per point rise in the cost of living index as at, Sholapur. It also directed that the second party should pay a sum of Rs. 500 to the first party's Sangh toward costs. It is this award that is now impugned before us in this Writ Petition. Sri V. L. Narasimha Moorthy, the learned Advocate for the petitioner, has attacked this award on the ground that the Tribunal has ignored the principles of law governing the several factors that arise in connection, with the determination of the dearness allowance claimed by the employees. He contends that the award is patently erroneous even in regard to the arithme--tical calculations regarding the financial burden. Further, it is contended by him that the Tribunal has not taken into consideration the evidence bearing on the several questions arising in this case and therefore the award is liable to be set aside, as being patently and manifestly erroneous and as being opposed to law. Before dealing with the above question, we may refer to the preliminary objection raised by the second party- before-the Tribunal. As mentioned earlier, it is not the petitioners contention that by virtue of the constitution of the S and Wage T., Board, the second party is estopped from raising the demands, but that the Tribunal should have either postponed the Go adjudication or should have given a. direction that whatever was award is made will ultimately be subject to the recommendations of the Wage Board. This contention appears to us to be without substance. It must be noted that the Wage Board referred to by the second party is not a statutory body and whatever decisions it might give would be only of a recommendatory character: and will not bind the Tribunal. In this connection our attention is-- drawn to the decision Chltavalsah Jute Mills Co. Ltd. v, Their Workman (1967 32 F J R 64) wherein the Supreme Court observes:- "This recommendation relates to the industry as a whole' and not to any individual industrial unit. That recommenda--tion cannot be understood as recommending that there should be no gratuity scheme for the employees in any particular unit, in that industry. What is true of an industry as a whole need not necessarily be so in respect of a unit there in. That position in law was not, disputed by Mr. Gokhale, and learned counsel for the appellant. Therefore, in considering the appropriateness or otherwise of the impugned scheme, we have to primarily consider its repercussion on the appellant." In view of the above-said observation, it was not necessary for the Tribunal to postpone the adjudication or to issue any direction as suggested by the learned counsel for the petitioner. The Tribunal, in paragraph 5 of the award, sets out two points that arose for consideration. The first point is whether "the first party has established the change of circumstances so as to necessitate the revision of dearness allowance. The Tribunal proposes to consider how far the dearness allowance should neutralise the deficiency in wages and the cost of living index." The second point proposed is to consider "the financial capacity of the second party to bear the additional financial burden after the scheme of dearness allowance is to be revised on the basis of the. Sholapur cost of living index". It is contended that though the Tribunal proposed to consider the question as to how far the dearness allowance should neutralise the deficiency in wages and the cost of living index, it has nowhere in the award considered this question. It .is contended by Sri V. L. Narasimha
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Moorthy that the percentage of neutralisation is an important factor to be considered. He invites our attention to the observations of the Supreme Court in Kamani Metals and Alloys Ltd. v. Their Workmen (1967 32 F J R 64) where it is observed as follows:- "A fair wage is thus related to the earning capacity and the workload. It must, however, be realized that `fair wage' is not `living wage' by which is meant a wage which is sufficient to provide not only the essentials above-mentioned but a fair measure of frugal comfort with an ability to provide for old age and evil days. Fair wage lies between the minimum wage, which must be paid in any event; and the living wage, which is the goal. As time passes and prices rise, even the fair wage fixed for the time being tends to sag downwards and then a revision is necessary. To a certain extent the disparity is made up by the additional payment of dearness allowance. This allowance is given to compensate for the rise in the cost of living. But as it is not advisable to have a 100,per cent neutralisation lest it lead to inflation, the dearness allowance is often a little less than 100 per cent. Neutralisation. In course of time even the addition of the dearness allowance does not sufficiently make up the gap between wages and cost of living and a revision of wages and or dearness allowance then becomes necessary. This revision is done on certain principles." Thus it is clear that the question of neutralisation is a facto that requires to be considered by the Tribunal. The other principles on the basis of which the dearness allowance can be revised are also referred to by Sri V. L: Narasimha Moorthy, in the course of his arguments and with which we shall deal later. 'Sri V. L. Narasimha Moorthy drew our attention to certain observations, in the award which are patently erroneous; or have no evidence to support. In paragraph 6 of the award the Tribunal states as follows: "There are two mills manufacturing only yarn and producing and supplying yarn to the tyre manufacturers in the country and huge quantities to foreign countries. Both the mills are in one and the same compound. One can undoubtedly say that the mills are the leading exporters of yarn to foreign countries and this mill is one of the oldest and most prosperous mills in India. The cheap labour that was available and is even now available at Gokak was in no small measure responsible for the prosperity of the company." This statement is not borne out by the evidence that is available to the Tribunal. It appears to be a general observation without any supporting material. The Tribunal further states that in 1937 there was no Union at Gokak. This is obviously wrong. Apart from the fact that there is no material in this regard, it is found by the Textile Labour Inquiry Committee, in its report published by the Bombay Government that with reference to the Gokak Mills that the Gokak Mills' Employees Union formed in 1936 is still in existence. It had a membership of 2,784 on 1st September 1939. If this factor has in any manner influenced the Tribunal in coming to any conclusion, it would be wrong. The statement in- paragraph 6 of the award that it was in the year 1949 that the Union came into existence and the workers agitated for enhanced wages is patently wrong. Further, it is difficult to understand why the Tribunal says "somehow or other the parties came to a settlement in the year 1949 with regard to wages." It must be appreciated that the wages were fixed as a result of a settlement, which is recorded in submission (I. C.) No.8 of 1949, in the Industrial Court, Bombay. The workers were represented by their Union. The matter came up for hearing on 19th July 1949 and the parties agreed upon Rs: 21.12 p. being fixed as the minimum wage for a month of -26 days. There is no basis for the Tribunal's inference that the wages were not fixed on any standardised scale as it was in Bombay, and Sholapur. The Tribunal remarks that:- "So far as Sholapur is concerned, the Court directed the mills to pay minimum wage of Rs. 26, per month in 1949 is addition to 1.75 pies per point per' day over and above 100 points. This award came into force on 1st January 1947. When all this took place in the neighbouring mills nothing happened if the II party mills though the conditions prevailing at Gokak are 'very much the same as those
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prevailing at Sholapur. This was also due to the fact that till 1947 there was no Union at Gokak and even if there was one, it was a puppet in the hands of the II party with practically no bargaining capacity." In view of what we have mentioned above, regarding the award in submission (I. C.) No. 8 of 1949 and what is mentioned in the Textile Labour Inquiry Committee's Report, this statement does not appear to be borne out by any evidence. The Tribunal further makes a 'very wide statement to the following effect:- "But one may say having regard to the common mode of living of all these workers the cost of living is the same throughout the country. May be, there is some slight change from place to place. That is exactly the reason why both the II party and the I party selected in 1950 the Sholapur cost of living as the guiding factor to determine the rate of dearness allowance. Since then there have been no change in Sholapur to take Sholapur out of the category so far as Gokak is concerned. Any way as per the award of 1950 in reference (I. C.) No. 82 of 1949 on the file of the Industrial Court, Bombay, Exh. M-1 (a) it is clear that both the parties agreed that the Sholapur cost of living index should be guiding factor and the dearness allowance for Gokak workers is to .be fixed on the cost of living index prevailing at Sholapur. The employees of the Gokak Mills practically got nothing by the settlement of 1930 because after the said settlement the grain concession was withdrawn. The benefit which the workers would get from the grain concession would be almost equal to the dearness allowance which they would get." No complaint whatever has been made by the workers in this regard. On the other hand, the workers after bargaining have come to a settlement and have agreed to Rs. 1.25 pies being paid per point per worker per day from 1st February, 1950, as per award dated 25th " January, 1951, Exh. M-1 (a), In the settlement one of the items is:- "It is agreed that with effect from 1st February, 1950, the practice, of supplying grain and other articles at pre-war prices will be discontinued and the Management will not, in future, be responsible for any supply of grain." In view of the settlement, the remark of the Tribunal does not appear to have any basis. The Tribunal further observes in paragraph 6 as follows:-- "Although the textile mills' in the cities like Bombay, Ahmedabad and Sholapur, increased the rates of standardised wages from time to time, the Gokak Mills did not fall in line with these mills with the result the Worker drawing the' wages in 1950 continued to draw the same wages in 1957 also." This is not supported by any evidence and in any event it is not correct to say that the mills did not fall in line with those mills because the mills have increased the dearness allowance and have given effect to the recommendations made by the Lakhadwala Committee, which revised the figures relating to the cost of living index. The Tribunal refers to the cost of living Index in the Mysore State at 740 per month and on the basis of that it says that the mills should be called upon to pay Rs 163.75 per month, while the mills are actually paying Rs. 117 per month. There is no cost of living index, so far as the Mysore State is concerned and it varies from place to place. Further, there is no reason why the Tribunal should take the cost of living in Mysore State into consideration while determining whether there is justification for the increase of dearness allowance in so far as the workers of the Gokak Mills are concerned. It is no doubt true that as mentioned by the Tribunal, the prices of foodstuffs and other necessary articles of living have increased but the question is to what extent the increase can be neutralised, taking into consideration the capacity of the industry to pay. This question has not merited any attention of the Tribunal. The facts of the case and the statements of the parties disclose that they have. consistently taken Sholapur as a standard to which Gokak should compare. It was pointed out by Sri K. T. Sule, the learned counsel for the second respondent, that though the question of industry-cum-region basis does not arise strictly in this case, inasmuch as it is the special need of the workers of the Gokak Mills with reference to
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increased cost of living that requires to be considered, he has invited our attention to the several factories which indicate that it is with -reference to Sholapur that the conditions of Gokak had to be determined. In the first place the determination of the basic wage was with reference to She Gokak Mills and in the second place in 1. C. No. 31 of 1936 also it is with reference. to Sholapur that the question of the basic wage was considered. Similarly while fixing the dearness allowance in 1. C. 82 of 1.949, the rate of dearness allowance was fixed at Rs. 1.25 pies point per workers per day over the Sholapur working class cost of index taken as 73. Similarly, when the Lakhadwala Committee revised the cost of living index as prevailing at Sholapur, it was…
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