The Workmen of Western India Match Co. Ltd vs The Western India Match Co. Ltd

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 429 of 1961

Decision Date: 11 April 1962

Coram: J.R. Mudholkar, A.K. Sarkar

The petition was brought by the workmen of Western India Match Co. Ltd. against the Western India Match Co. Ltd. The judgment was delivered on eleven April 1962 by the Supreme Court of India. The opinion was prepared by Justice J. R. Mudholkar, who was joined on the bench by Justice A. K. Sarkar, Justice Subbarao and Justice K. The case is reported in the 1966 volume of the All India Reporter at page 976 and also appears in the 1963 Supreme Court Reports (Second Series) at page 27, with subsequent citations in the 1968 and 1972 Reports of the Supreme Court. The dispute concerned an industrial question governed by the Industrial Disputes Act of 1947, specifically section nineteen paragraph two, and involved issues relating to the scale of pay, conditions of service, dearness allowance, and whether employees of the sales office and those of the factory could be treated as equivalent. The matters also raised questions about the termination of a prior settlement and whether a charter of demands could be considered a notice of termination of that settlement.

The respondent company operated a factory with an attached office in Alambazar, a suburb of Calcutta, and additionally maintained a sales office in the commercial district of Calcutta. Without first issuing a formal notice as required by section nineteen paragraph two of the Industrial Disputes Act to terminate an earlier settlement, the trade union presented a charter of demands that sought, among other things, an increase in dearness allowance, a modification of the method used to calculate that allowance, and a revision of the pay scale. The union asserted that the workers’ current remuneration was considerably lower than that of comparable employees in the sales office and that the existing rates were inadequate in view of the rising cost of living. Initially, the dispute limited to dearness allowance was referred to an industrial tribunal, and subsequently the dispute over grades and the pay scale was also referred to the same tribunal. The tribunal, after rejecting the company’s preliminary objection that it lacked jurisdiction because the workmen had not issued a notice terminating the settlement under the statutory provision, held that the employees were not entitled to a higher dearness allowance nor to a change in the basis of its computation. However, the tribunal observed that a change in circumstances justified a revision of the pay scale. The Court further held that during ongoing negotiations, when the union, by way of a letter, asked the company to treat the charter of demands as a notice under section nineteen paragraph two without first terminating the earlier award‑based settlement, and the company agreed to refer the disputed issues to a tribunal, the requirement of a formal statutory notice became immaterial. The combination of the charter of demands and the accompanying letter effectively constituted a notice of termination of the previous settlement. The Court also observed that members of a union representing factory employees were dealt with by the employer on a different basis than the employees of the sales office, a distinction that precluded an automatic equating of the two groups.

In this case the Court observed that the employees of a sales office in Calcutta belong to a different category from the workers employed in a manufacturing plant. The former are staff of an engineering enterprise, while the latter work for a mercantile concern, and both groups are subject to the recommendations issued by the Bengal Chamber of Commerce. Consequently, the Court held that the circumstances of the factory workers cannot be compared with those of the sales‑office staff. The factory employees do not, by right, acquire the benefit of the rates fixed by the Bengal Chamber of Commerce because those rates were not intended to be applied to them. The Court cited the decision in Clerks of Calcutta Tramways v. Calcutta Tramways Co. Ltd. [1956] S.C.R. 722 to support this principle. Moreover, the Court stated that there is no compelling reason for an employer to impose uniform terms of employment on employees who work in different establishments. Various factors must be taken into account, including the value of the work to the employer, the employer’s capacity to pay, the cost of living, and the availability of persons capable of performing the particular type of work. Accordingly, an employer’s decision not to provide identical service conditions to all workers performing broadly similar work does not constitute discrimination or a breach of any principle of industrial law.

The Court further examined the Industrial Tribunal’s refusal to extend the dearness allowance, as formulated by the Bengal Chamber of Commerce, to the factory employees at the Alambazar plant. It concluded that this refusal did not violate any principle of natural justice or any important principle of industrial law. Even assuming that the Tribunal had exercised its discretion incorrectly by not granting a uniform dearness allowance to all employees of the same employer in different establishments, such a mistake does not provide a basis for interference under Article 136. The Court referred to the authorities State of Madhya Pradesh v. G. C. Manager [1955] S.C.R. and Bengal Chemical & Pharmaceutical Works Ltd. v. Their Workmen, [1959] S.C.R. 136 in support of this view. The Court also noted that an award of an Industrial Tribunal is ordinarily not revisable unless there is a material change in circumstances. Here, the Court recognized that the cost of living had undeniably risen since the award was made, a fact so evident that the Court is entitled to take judicial notice of it. The purpose of granting dearness allowance is to mitigate, at least partially, the impact of rising living costs, and under such changed circumstances the factory employees are entitled to have the basis of the allowance revised. The Court cited Burn & Co. Ltd. v. Their Workmen, 1956 1 S.C.R. 781 for this principle. The judgment then recorded the particulars of the appeal: Civil Appeal No. 429 of 1961, filed by special leave against the award dated 16 September 1958 of the Fourth Industrial Tribunal, West Bengal, in Cases Nos. VIII‑II of 1958. The counsel for the appellants were N. C. Chatterjee, A. N. Sinha and Dipak Dutta Choudhri, while the respondent was represented by C. K. Daphtary, Solicitor‑General of India, B. Sen and B. N. Ghosh. The appeal was heard on 11 April 1962, and the judgment was delivered by Justice Mudholkar.

The award under review had been made by the Industrial Tribunal of West Bengal, sitting at Calcutta. The material facts show that the respondent, Western India Match Co., operated a manufacturing plant together with an attached office in Alambazar, a suburb of Calcutta, and also maintained a sales office in the commercial district of Calcutta. On 25 January 1957 the employees of the Alambazar plant presented the respondent with a charter of demands containing seven separate requests. The demands sought an increase in dearness allowance, a change in the method of calculating that allowance, and a revision of the existing pay‑scales, among other items. The respondent refused to accede to any of the demands, and consequently the appellant‑union approached the Labour Commissioner of West Bengal. Acting on the Commissioner's suggestion, a series of conferences were convened between the parties and the Conciliation Officer with the objective of reaching a settlement. During those conferences the respondent put forward counter‑proposals, but the union rejected each of them. By order dated 14 January 1958 the Government of West Bengal referred only the dispute concerning dearness allowance to the Fourth Industrial Tribunal at Calcutta, leaving the remaining issues out of that reference. After that reference had been made, conciliation proceedings concerning the other disputes were resumed, and on 23 May 1958 the union and the respondent arrived at a settlement covering all matters except the question of grades and pay‑scales. The parties agreed that the unresolved issue should be referred for adjudication to the same tribunal that was already dealing with the dearness‑allowance question. Accordingly, by order dated 3 June 1958 the Government of West Bengal referred the grades‑and‑pay‑scale issue to the Fourth Industrial Tribunal, West Bengal. Before turning to the parties’ contentions, the Court found it necessary to set out additional background. Western India Match Co. owned not only the Alambazar plant but also factories in Bareilly (Uttar Pradesh), Ambernath (Maharashtra), Tiruvottiyur (Madras) and Port Blair. The Alambazar factory had been established in 1930. In addition to these production units, the respondent kept separate sales offices at various locations throughout India to promote sales and fulfil orders; one such sales office was situated in Calcutta. At the time of the reference, the Alambazar factory employed 1,866 persons. Of these, 1,504 were daily‑rated or piece‑rated workers and 362 were monthly‑rated employees. The workforce also included 27 officers, 67 clerks and 32 supervisors, with the remainder consisting of bearers, watchmen, malis, fitters and similar categories. Except for the officers, all monthly‑rated employees fell within the definition of “workers” under the Factories Act. In 1946 a union called the Wimco Mazdoor Union was formed, comprising only the daily‑rated and piece‑rated workers, and the respondent gave this union recognition. In 1950 another union, the Wimco Employees Union, was created consisting solely of the monthly‑rated employees, excluding officers, and it too was recognized by the respondent on the condition that its membership be limited to monthly‑rated workers of the Alambazar factory.

In this case, a union composed solely of monthly‑rated employees, excluding officers, was created and subsequently recognised by the respondent company. The recognition was conditioned on the rule that only monthly‑rated workers of the Alambazar factory, apart from officers, could be members. Soon after receiving recognition, the union negotiated an agreement with the management concerning the scales of pay, the dearness allowance and other conditions of service applicable to the monthly‑paid workforce at the Alambazar plant; the agreement was dated 29 September 1951. Disputes later emerged between the union and the respondent during 1954 and the Government of West Bengal ordered, by a notification dated 1 September 1954, that the matters be referred to the Second Industrial Tribunal, West Bengal, for resolution. During the tribunal proceedings the parties reached a further settlement on 29 April 1955, and on 15 September 1955 an award based on that settlement was published in the Calcutta Gazette. The award dealt with numerous service‑related issues, including rates of pay and dearness allowance, and it stipulated that the production bonus previously paid to monthly‑rated workmen would be incorporated into their basic salary. The award was to remain in force unless two months’ notice was given after 31 December 1956. Without issuing any such notice, the union presented new demands on 25 January 1957 that concerned the same matters addressed by the earlier settlement. The union’s principal basis for seeking a revision of the award and for altering the method of computing dearness allowance and the pay scales was the allegation that factory employees received remuneration considerably lower than that paid to comparable staff at the respondent’s sales office, a situation described as unfair. A second ground relied upon was that other similar concerns provided more favourable terms to their workers than those offered by the respondent. A third ground asserted that the existing rates were inadequate in view of the rising cost of living, while a fourth ground emphasized that the respondent was earning substantial profits and therefore could afford an increase in dearness allowance and pay scales. The respondent raised a preliminary objection, contending that the tribunal lacked jurisdiction because the union had not served the two‑month termination notice required under section 19(2) of the Industrial Disputes Act, 1947. On the merits, the respondent argued that (i) the conditions of service applicable to sales‑office staff differed from those applicable to factory workers; (ii) there had been no material change in circumstances since the earlier award that would justify any alteration of the pay scales; on

The respondent put forward several arguments. First, it contended that the conditions of service, the scales of pay and the dearness allowance that existed in the Alambazar factory were at least as good as, if not better than, those enjoyed by workers in other large concerns such as Bridge & Roof Co., Imperial Chemical Industries, Hindusthan Lever and Marshall & Sons, and that those larger enterprises could not be compared with the respondent‑company. Second, the respondent asserted that it lacked the capacity to increase the dearness allowance for its monthly‑rated factory employees because the cost of production had risen, labour charges had increased, excise duty had been enhanced and competition in the market had intensified, all of which together had reduced the percentage of profits. The tribunal rejected the preliminary objection raised by the respondent. However, the tribunal observed that the factory workers were not entitled to a higher dearness allowance nor to a change in the method of computing the allowance, but it noted that a change in circumstances justified a revision of the pay scales. Accordingly, the tribunal accepted the respondent‑company’s contention and adopted the revised scales of pay that had been offered to the appellant‑union during the conciliation proceedings. Thereafter, the respondent‑company’s representative, Mr B Sen, reiterated an objection based on section 19(2) of the Industrial Disputes Act, 1947. That provision provides that a settlement between employer and employees is binding for the period agreed by the parties, and if no period is agreed, it remains binding for six months from the date of the settlement and thereafter until two months after a written notice of intention to terminate the settlement is served by either party. The parties had indeed reached a settlement on 29 April, covering dearness allowance and pay scales, and no formal notice as required by subsection 2 of section 19 was given. In the court’s view, the respondent‑company could not rely on that objection with respect to the revision of pay scales because the memorandum of settlement dated 23 May 1958, signed by the representatives of the parties, expressly provided that the question of revising the scales of pay should be referred to the same Industrial Tribunal that was already dealing with the dearness‑allowance issue. The memorandum further recorded that the parties had met jointly on several occasions and had settled the entire dispute except for two issues—(1) dearness allowance, which had already been referred to the Fourth Industrial Tribunal, and (2) revision of the scales of pay. This recital demonstrated that the respondent had agreed to refer both the dearness‑allowance matter and the revision of pay scales to the Tribunal.

It was observed that the respondent‑company, in addition to agreeing that the Tribunal could adjudicate the question of dearness allowance, also expressly acknowledged this jurisdiction in paragraph 37 of its written statement. Because the company had previously accepted the Tribunal’s authority over the dearness‑allowance issue, it could not later challenge that jurisdiction. Moreover, the record showed that the respondent‑company had, in its reply dated 29 March 1957 to the charter of demands issued on behalf of the appellant‑union, stated that the earlier settlement had not been validly terminated. In response, the General Secretary of the Union wrote a letter on 8 April 1957 asserting that the various representations made by the union to the respondent and the submission of the charter of demands together amounted to a notice of termination of the settlement. Although no formal notice under section 19(2) had been served, the Court held that the Union’s letter could be interpreted as a notice within the meaning of that provision. The Court also noted that this representation was made long after the two‑month period prescribed by the law had elapsed. Consequently, the Court overruled the contention advanced by Mr Sen on this point.

Turning to the merits of the dispute, the principal argument raised by Mr Chatterjee on behalf of the union was that the employees working in the respondent’s Alambazar factory were being discriminated against in comparison with their counterparts employed in the sales office in Calcutta. According to the union, although the two groups performed the same kind of work, they were placed in different grades, were paid under different scales of pay, and received different amounts of dearness allowance. The union contended that employees of the same employer, performing the same work in the same city, should not be subjected to such differential treatment and that the Tribunal’s decision, by permitting the disparity, denied the appellant‑union members equality with the sales‑office employees and ran contrary to the principles of industrial law.

The Court, however, pointed out that the union’s claim against the sales‑office employees was limited strictly to the issue of dearness allowance. The reference to the existence of different pay scales in the sales office was made only in support of the union’s request for an upward revision of the present pay scales. Accordingly, counsel could not now press the argument that the pay scales themselves should be identical for factory and sales‑office employees. The Court therefore agreed to consider the allegation of unwarranted discrimination only to the extent that it concerned the calculation of dearness allowance.

In order to assess that argument, the Court found it necessary to recall the historical background of industrial adjudication in Bengal and to explain why a distinct basis for computing dearness allowance was applied to the respondent’s sales‑office employees as opposed to its factory workforce. At the end of 1945, the Bengal Chamber of Commerce conducted an enquiry into the cost of living of clerical staff employed by mercantile firms in Calcutta. Based on the findings of that enquiry, the Chamber fixed a particular amount to be granted as dearness allowance to those clerical employees and also established a “middle‑class cost of living index.” The Chamber recommended that its member firms accept these determinations. This historical fact formed part of the context for understanding the differing methods applied to the two categories of workers.

That inquiry also established for the same employees a figure that it termed the middle‑class cost of living index and it recommended that its member organisations should accept those findings. According to the testimony of Mr Sen, the respondent’s sales office was a member of the Bengal Chamber of Commerce whereas the factory located at Alambazar was not a member of that Chamber, and Mr Chatterjee did not dispute this point. In 1948 a number of disputes arose in Calcutta between employees and employers of engineering firms as well as between employees and employers of mercantile concerns. Each set of disputes was referred to a separate Industrial Tribunal. The first Engineering Tribunal was constituted on 3 July 1948 and it was tasked with hearing disputes involving 119 companies, the respondent’s factory being one of them. The award rendered by that Tribunal was subsequently published in the Calcutta Gazette and was given the force of law. Later, additional disputes emerged between certain engineering concerns and their employees; these were sent to a second Engineering Tribunal which was appointed on 31 August 1950, and the award of that Tribunal likewise acquired legal effect. From these developments it appears that the members of a union representing the employees of the Alambazar factory were treated differently from the employees of the sales office in Calcutta, the former being classified as workers of an engineering concern and the latter as workers of a mercantile concern. The respondents, however, argued before the Court that the two groups were not independent undertakings but rather parts of a single undertaking, namely Western India Match Co., and that at least for the purpose of calculating dearness allowance they should therefore be placed on an equal footing. The Court observed that, as already indicated, the employees of the sales office were subject to the recommendations of the Bengal Chamber of Commerce, which the respondent was essentially bound to follow in order to remain consistent with other comparable establishments, and consequently the situation of the factory employees could not be equated with that of the sales‑office employees. The Court then referred to the earlier decision in Clerks of Calcutta Tramways v. Calcutta Railways Co. Ltd., where the clerical staff of the Calcutta Tramways claimed that, being middle‑class, they were entitled to receive dearness allowance on the basis of the Bengal Chamber of Commerce’s findings. That plea was rejected by the Court on the ground that there is no universal rule governing the grant of dearness allowance to all categories of employees; there exist different grades within the middle class and the Calcutta Tramways clerks could not claim the rates fixed by the Bengal Chamber of Commerce for mercantile firms. The Court further noted that the factory employees could not all be characterised as belonging to the middle class because, as the evidence admitted, roughly two‑thirds of them were classified as subordinate staff. It was also suggested that the clerical staff both in Calcutta proper and …

In the case relating to Alambazar, the Court observed that the work performed by one group of clerks cannot be said to be the same as the work performed by another group of clerks. The clerks who are employed in the factories are required to carry out duties that are directly connected with the manufacturing processes occurring in the factory. Their responsibilities include dealing with the labour employed in the factory, overseeing the receipt of raw materials, monitoring the progress of production, and handling the finished products, among other tasks that flow from the operation of a manufacturing unit. By contrast, the clerical staff who work in the sales office perform duties that relate to the marketing of the finished product, dealing with other firms, maintaining correspondence with the head office and with other units, and performing other functions that arise from the commercial or mercantile side of the business. Although the two sets of clerical staff may perform some similar tasks, the Court stressed that there is no identity of work between them. It was suggested that the work of the sales‑office clerks may carry greater responsibility, but the Court noted that whether this is true or not is immaterial for the purpose of the analysis. What is material is that, if the work each set of employees does is not identical, the employer is free to assign different values to the two categories of work. The same observation can be extended to the work of subordinate staff. Consequently, if under these circumstances the respondent chose to adopt a different method of computing dearness allowance for the sales‑office employees than the method offered to the factory employees, such a distinction would not be invidious. The sales office is a mercantile establishment, and the respondent is bound to follow the practice of similar mercantile establishments, paying to its sales‑office employees the same dearness allowance that other mercantile firms grant to their employees. In view of this, the factory employees cannot automatically claim that the rates fixed by the Bengal Chamber of Commerce for mercantile firms must also be applied to them, especially since those rates were never intended for factory workers. The Court also observed that, in the earlier settlement, the appellant‑union had accepted the working‑class cost‑of‑living index as the basis for determining dearness allowance, and even in the present claims the union had suggested that the same index be used, albeit with variations in the rates across three slabs. While it is true that the employees in Alambazar as well as those in Calcutta reside within the limits of the Corporation of Calcutta, this fact alone does not justify granting them the same rate of dearness allowance as the sales‑office employees. Moreover, the Court could not overlook the situation that other factories located in the same area do not pay dearness allowance according to the Bengal Chamber of Commerce rates. Adopting those rates for the factory employees in Alambazar could disturb the existing industrial peace in the region. Accordingly, the tribunal was found to have exercised its discretion properly by refusing to accede to the appellant’s demand for the same dearness‑allowance rates, and the Court affirmed that judgment.

It was observed that the workers employed in the factory had been hired under terms and conditions that were different from those that applied to the employees of the sales office from the very beginning. The record showed that certain benefits, such as provisions of rations, free accommodation, gratuity and similar facilities, were granted to the factory workers but were not extended to the staff of the sales office. Nevertheless, it was contended that when those benefits were added to the basic wages and dearness allowance of the factory staff, the total compensation still left them comparatively disadvantaged relative to the sales‑office employees. The argument also pointed out that, on the whole, the sales‑office personnel occupied a better overall position, but that advantage was attributed to the fact that recruitment for the two establishments had always been carried out on distinct terms and conditions. The Court expressed the view that there was no compelling reason to force an employer to provide identical terms of employment to employees working in separate establishments, because a variety of factors must be taken into account. Such factors include the value of the work to the employer, the employer’s capacity to pay, the prevailing cost of living, and the availability of suitable persons to perform the particular type of work. In this context, the Minimum Wages Act itself recognized that the employer enjoyed broad discretion in determining the most important condition of service—namely, the rate of pay—provided that the wage did not fall below the prescribed minimum. It was further noted that even the highest employer, the State, did not impose uniform conditions of service on all its workers engaged in broadly similar work. For example, the clerical staff and the menial staff—now referred to as class IV staff—employed in the Secretariat were governed by service terms that differed from those applicable to employees in other offices, such as those under the Delhi Administration. High‑level Pay Commissions had not treated such differences as discriminatory or as a breach of any principle of industrial law. The judgment in State of Madhya Pradesh v. G.C. Mandawar (1) was cited, where the clerical staff of Madhya Pradesh sought to receive dearness allowance on the same basis as Central Government employees posted in the same state because they performed similar work at the same location. The Court rejected that contention. Accordingly, it was concluded that the Industrial Tribunal’s refusal to extend to the factory workers in Alambazar the dearness allowance rates formulated by the Bengal Chamber of Commerce did not violate any principle of natural justice nor any important principle of industrial law. In support of this conclusion, reference was made to the earlier decision in Bengal Chemical & Pharmaceutical Works Ltd., Calcutta v. Their Workmen (1), where Justice Gajendragadkar, speaking for the Court, observed that Article 136, although expressed in the broadest terms, was to be invoked only in cases where an award contravened principles of natural justice, caused substantial and grave injustice, raised a significant industrial‑law question requiring definitive resolution, or presented exceptional circumstances warranting the Court’s consideration.

In this case the Court explained that its power under Article 136 may be exercised only in exceptional situations. Such situations exist when a tribunal’s award breaches the principles of natural justice, results in serious and grave injustice to the parties, raises an important question of industrial law that requires a definitive decision by the Court, or reveals any other special circumstance that warrants the Court’s intervention. Accordingly, even if it were assumed that the Industrial Tribunal had erred in refusing to grant a uniform dearness allowance to all employees of the same employer who worked in different establishments, that alleged error alone did not constitute sufficient ground for the Court to interfere under Article 136.

The second ground on which the tribunal’s decision concerning dearness allowance was challenged related to the testimony of the respondent’s General Manager, Mr Wasmouth, who, while giving evidence, stated that the respondent continued to adhere to its original offer on dearness allowance. The petitioners argued that Mr Wasmouth’s statement implied that the respondent accepted that there was scope for increasing the allowance. In response, counsel for the respondent, Mr B Sen, contended that the offer made by the company was a comprehensive package. Because the appellant‑union had not agreed to accept the entire package, the tribunal was justified in refusing to order any increase in the dearness allowance.

The Court noted that the only issues remaining between the parties were two‑fold: one related to the dearness allowance and the other to the scales of pay. A comparative chart setting out the union’s demand and the company’s offer with respect to the existing scales of pay, dearness allowance, superannuation, casual leave, sick leave and overtime had been placed on record as Annexure GI. The Court confined its analysis to the portions of the chart dealing with the first two matters. The chart showed, for each grade, the amounts claimed by the union and the corresponding figures offered by the company. For Grade A 1 the union demanded a basic wage of Rs 35, a dearness allowance of Rs 118 and a pension of Rs 65 for a thirty‑year service, while the company’s offer comprised a basic of Rs 30, a dearness allowance of Rs 1‑4, and a pension of Rs 50‑1‑4. For Grade A 2 the union asked for Rs 40 basic, Rs 2‑8 dearness allowance and Rs 90 pension, whereas the company proposed Rs 35 basic, Rs 1‑4 dearness allowance and a pension of Rs 55‑1‑4. For Grade A 3 the union’s demand was Rs 60 basic, Rs 3‑8 dearness allowance and Rs 130 pension; the company’s offer was Rs 60 basic, Rs 2‑0 dearness allowance and a pension of Rs 80.

Continuing with the pay structure, the chart indicated that for Grade B 1 the union sought a basic wage of Rs 65, a dearness allowance of Rs 5‑0 and a pension of Rs 115‑EB‑7; the company’s offer was Rs 55 basic, Rs 4‑0 dearness allowance and a pension of Rs 95‑EB‑5, with no further offer for the higher scale. For Grade C 1 the union demanded Rs 75 basic, Rs 6‑0 dearness allowance and a pension of Rs 135‑EB‑8, while the company’s counter‑offer included Rs 70 basic, Rs 5‑8 dearness allowance and a pension of Rs 125‑EB‑7, with an upper limit of Rs 215 for twenty‑year service. The pattern continued for Grades C 2, C 3 and C 4, with the union’s demands and the company’s offers listed respectively as follows: Grade C 2 – union Rs 95 basic, Rs 8‑0 dearness, Rs 175 pension; company Rs 85 basic, Rs 7‑8 dearness, Rs 160 pension, upper limit Rs 295 for twenty‑year service; Grade C 3 – union Rs 120 basic, Rs 12‑0 dearness, Rs 240 pension; company Rs 110 basic, Rs 10‑0 dearness, Rs 210 pension, upper limit Rs 420 for twenty‑year service; Grade C 4 – union up to a limit of Rs 650, company up to a limit of Rs 500.

The annexure further displayed the dearness allowance rates applicable to sales‑office employees. According to that schedule, employees earning a basic wage from Rs 1 to Rs 50 were entitled to a dearness allowance of 125 per cent on a 1‑to‑25 basis, those earning from Rs 51 to Rs 100 received 25 per cent, those earning from Rs 101 to Rs 160 received 17 per cent, those earning from Rs 161 to Rs 200 received 12 per cent, and those earning from Rs 201 to Rs 250 received 7 per cent. The Court’s discussion was limited to these figures as they related to the two principal disputes before it.

The schedule shows that the dearness allowance for the range of Rs 201 to Rs 250 is set at seven percent, while for the range of Rs 251 to Rs 300 it is set at five percent. In addition, an extra three percent is added for every five‑point rise or fall in the working‑class cost‑of‑living index figure. The existing remuneration board is to be adjusted in accordance with this new slab structure. From these figures it is evident that the union had put forward two alternative demands concerning dearness allowance. The first alternative was that the same scale used for sales‑office employees should be applied to the workers in question. The second alternative sought a modification of three slabs of the existing scheme, using the working‑class cost‑of‑living index as the basis for the calculation. The company declined to make any counter‑offer to the union’s primary demand, but it did make a counter‑offer in response to the alternative demand. According to the testimony of Mr Wasmouth, the respondent company maintained its counter‑offer, which was based on the working‑class cost‑of‑living index figures, even before the Tribunal began its proceedings, despite the fact that the conciliation process had subsequently broken down. During the conciliation proceedings this counter‑offer was linked to a separate counter‑offer concerning the grades and scales of pay. It can therefore be presumed that the company regarded the combined package not merely as a concession intended to bring the dispute to an end, but also as a fair arrangement whose financial commitment was within the company’s capacity. Although evidence shows that Mr Wasmouth said the respondent company did not adhere to its offer relating to grades and scales of pay, this does not alter the character of the offer that was fair and reasonable at the negotiation stage; the offer does not become unfair, unreasonable or unnecessary simply because of later conduct. The Tribunal, having revised the pay scales on the basis of the respondent’s offer, would, if it also revised dearness allowance on the same basis, be implementing exactly what the respondent company had voluntarily offered during the conciliation negotiations, an offer that was regarded as fair, reasonable and necessary. In these circumstances the Court finds it difficult to discern the principle on which the Tribunal refused to revise the dearness‑allowance scales in accordance with the respondent’s offer. Consequently, while the Court rejects the union’s contention that dearness allowance should be fixed on the same basis as that applied to sales‑office employees, it holds that, in view of the stance consistently taken by the respondent company throughout the proceedings, the dearness allowance should be revised in line with the company’s own offer. The fact that the company made such an offer indicates two important points: first, that a revision of dearness allowance was both necessary and appropriate, and second, that the company possessed the financial ability to pay a higher allowance. It was argued before the Court that the offer had been made during negotiations and was without prejudice, and therefore ought to be disregarded. Nevertheless, the Court cannot overlook the significance of the offer, as highlighted by Mr Wasmouth’s evidence.

Wasmouth continued to rely on that offer even after the conciliation proceedings had concluded without result, thereby effectively reviving the original proposal. The respondent, however, contended, relying on the decision in Bun and Co. Ltd. v. Their Employees (1), that an award of an industrial tribunal could be reopened only if a material change in circumstances could be demonstrated, and since no such change had occurred, the 1955 award concerning dearness allowance should not be altered. While it is correct that an award is not ordinarily subject to revision absent a change of circumstances, the tribunal found that a change had indeed occurred because the cost of living had undeniably risen since the award was made. This fact was so evident that the court felt obliged to take notice of it. The purpose of granting dearness allowance is to offset, at least partially, the increase in the cost of living, and in the present circumstances the factory workers were entitled to argue that the old basis required revision. Consequently, the tribunal concluded that there was no merit in the respondent’s argument.

Regarding the question of grades and scales of pay, counsel for the respondent asserted that the tribunal had failed to apply its mind to the issue and had merely accepted the respondent’s offer in a mechanical fashion. The tribunal rejected this characterization as wholly accurate. It acknowledged that the tribunal had accepted the respondent’s offer as reasonable, but it also explained the reasons for that acceptance. In its award, the tribunal stated that the principal point raised in support of the workers’ demand was that the existing grades and scales of pay were too short and should be extended with any modifications deemed necessary under the circumstances of the case. After comparing the existing grades with the company’s proposal, the tribunal observed that at first glance the chart showed that the current rates provided pay scales for six grades up to sixteen years of service and for one grade only up to ten years. The union’s demand was to extend the scales to twenty years in place of ten and sixteen years, thereby raising both the minimum and maximum limits of the pay scales in all cases. The company’s offer, except for grade B(1), was substantially ahead of the existing grades and scales of pay.

The tribunal noted that there were strong reasons for revising the grades and scales of pay and opined that the company’s offer should have been accepted by the union. It further observed that the revision of the grades and scales of pay as proposed by the company would, to a great extent, alleviate the hardships faced by the employees, who, for the time being, would be satisfied with such a revision. Accordingly, the tribunal affirmed that it had indeed applied its mind to the company’s offer and had also taken into account the demand made by the union. Upon consideration of these matters, the tribunal reached its conclusions.

The Tribunal had examined the evidence and the submissions of the parties and had reached the conclusion that the offer made by the company was reasonable. That conclusion was identified by the Tribunal as a factual finding, and the judgment noted that such a factual determination could not be questioned in an appeal filed under Article 136 of the Constitution, which governs the exercise of special leave to appeal. In view of this limitation on the scope of review, the Court allowed the appeal in part. The Court also directed that the award issued by the Tribunal be modified so as to incorporate a revision of the dearness allowance on the basis of the company’s offer. The modification was to be made subject to which the appeal would stand dismissed. Because the decision resulted in a partial success for both the petitioner and the respondent, the Court declined to make any order as to costs. Accordingly, the appeal was allowed in part, the award was to be altered in accordance with the company’s proposal regarding dearness allowance, and the matter was otherwise dismissed without costs.