D.Y. Chandrachud, J.@mdashAn award of the Industrial Tribunal in a wage reference forms the subject matter of the proceedings. Both the
employer -Hindustan Lever Limited (HLL) - and the Unions are dissatisfied with material segments of the award. The proceedings before the
Court involve a petition under Article 226 of the Constitution by the employer and two petitions by the Unions. Submissions have been heard on
behalf of the employer and on behalf of the Unions up on the challenge instituted before the Court in all the petitions to getherand this judgment
would accordingly dispose of those petitions.Essentially, the question that arises for determination before the Court is whether the Industrial
Tribunal has failed to exercise its jurisdiction consistent with the principles of law that must govern wage adjudication. This Court, while accepting
the gravamen of the challenges to the award has arrived at the conclusion that the Industrial Tribunal has manifestly failed to apply the settled
principles that govern wage adjudication. A remand of the proceedings shall accordingly follow.
The Reference:
2. Hindustan Lever has a Head Office at Churchgate, a Factory at Sewri and a Research Centre at Andheri in the Mumbai Region. The Company
inter alia has at material times engaged in the manufacture of soaps, detergents and personal products. The wage references relate to demands
raised by the Union for the hourly rated and subordinate category of workmen engaged in the three establishments. At the establishment at
Churchgate, HL Languages clerical workmen and subordinate staff. The clerical workmen are classified in categories ""C"" and ""T"" depending upon
whether they work for 36 or 48 hours, while the subordinate staff includes Sepoys, drivers, watchmen, sweepers and coolies who work for 42
hours. The factory at Sewri engages (i) Hourly Rated workmen who are operatives; (ii) Subordinate staff similar to those employed in the Head
Office working either 42 or 48 hours a week;and (iii) Clerical workmen as in the Head Office. At the Research Center at Andheri, HLL engages
Hourly Rated subordinate and Clerical staff as at the Factory and Head Office.
3. The subordinate staff at the Head Office was governed by an Industrial Settlement dated 10th January 1992. The settlement was extended to
the subordinate and hourly rated staff of the Bombay Factory and of the Research Centre by an award of the Industrial Tribunal presided over by
Mr. H.L. Mehendale,dated 24th March 1994. The settlement and the award were terminated 1 and a fresh Charter of Demands was placed on
the Company by the Union. Upon a failure of conciliation proceedings,three References came to be made to adjudication. The Charter of
Demands and the dates on which the orders of reference came to be made are as follows:
Reference No. Establishment Charter of DemandsDate ofReference83/97 Head Office 23-2-1996 30-11-199751/98 Mumbai Factory
09/07/9723-6-199856/99 Research Center29-10-1998 23-8-1999
4. The Union filed statements of claim on 24th June 1998,1st September 1998 and 5th November 1998 seeking to justify on the basis of the
region-cum-industry principle. The management filed its Written Statements in the References. The Union inter alia urged before the Industrial
Tribunal that the Mumbai Establishment of Colgate Palmolive is a comparableconcern. A Union representative from Colgate Palmolive was
examined in evidence. The Secretary of the claimant Union was examined in support of the demands. During the pendency of the References
several demands came to be dropped by the Union,these being (i) A five day week/HR duty; (ii) Accident benefits; (iii)Housing assistance/loans;
(iv) Loans; (v) Gratuity; (vi) Actingallowance; (vii) Recruitment; (viii) General demands and (ix)Dearness allowance.HLL''s claim to parity:
5. While the adjudication was pending, HLL entered into a settlement with the Clerical workmen of the Head Office on 20thFebruary 2003. It is
also now an admitted position that similar settlements in respect of the monthly rated staff have been entered into by the same Union for the
Factory at Sewri and for the Research Centre. The settlement for the Factory was entered into on 13th April 2004 and for the Research Centre on
26th August2005. HLL filed an application on 11th July 2003, Exhibit C-61 for disposing of the References on the basis of parity. In support of its
plea, HLL relied upon what it pleaded was a long standing practice under which settlements signed at the Head Office or at any of the
establishments in the Mumbai Region had been extended to the other establishments on the basis of parity. In this regard, in support of its
application, the management pleaded as follows:
...in the past, whenever a settlement was signed either at the head office or at any of the establishments in the Bombay region, the Unions have
sought to claim similar benefits on the basis of parity and this Hon''ble Court has,by several Awards, extended the benefits given in one
establishment to another establishment on the basis of parity and accordingly disposed off the reference. In fact His Honour Judge Shri Mehendale
disposed of e''en the demands of the Company in Ref (IT) No. 76/92 without permitting the Company to lead evidence by Award dated 20-03-
95. The Company has contested these Awards in Writ Petition(s) ... along with the Writ Petition filed by the Union ... These petitions came up for
hearing before His Lordship Justice S. Radhakrishnan.During the course of the hearing, the Union submitted statement tracing the history of
collective bargaining and extension of benefits in the various establishments and contended that benefits have been extended not on the basis of
region-cum-industry but on the basis of benefits that have been given in other establishments of the Company in the Bombay region.
6. The contention of the management was that the principle of parity between the three establishments at Mumbai has in a judgment of a Learned
Single Judge of this Court,Dr.Justice S. Radhakrishnan, in a batch of petitions between the same parties, which has attained finality. Since the
Unions had not moved the Tribunal for a disposal of the References in terms of the Head Office settlement, the management submitted thus:
In the circumstances, the Company is constrained to make this application so that an Award can be made making the head office settlement as the
basis on the principle of parity albeit extending the benefits with necessary changes as may be applicable as it has always been the case of the
unions as will be seen from the extracts of the judgment of Justice S.Radhakrishanan reproduced above as also the contentions of the unions as
submitted before the HighCourt in Annexure 6. The benefits given in one establishment ought to be extended to the other establishments on the
basis of parity.
HLL stated that in the Head Office settlement of 20th February 2003the Union had conceded several demands of the Company and had given up
certain demands including those for revision of basic wages, pension and stagnation increments. While seeking of the References in terms of the
Head Office Settlement,HLL contested the claim of the Union to retrospective extension of benefits and for interest.
7. In its reply dated 18th July 2003, the Union submitted that the application at Exh.C-61 be heard together with the main Reference on merits.
The grievance of the Union was that while seeking parity HLL was conceding only a small fraction of the benefit which was given to the Clerical
staff at the Head Office and that in actual fact the principle of parity was not being fully applied.The case of the Union was that while there was an
unbroken history of parity in so far as common allowances are concerned as between the Clerical staff on the one hand and the subordinate and
Hourly Rated staff on the other, this parity did not relate to basic wages or to retirement benefits. The Union consequently sought final disposal of
the References on all facets stating that it founded its submission both on the basis of region-cum-industry and The settlement with the Head Office
which should be appliedharmoniously.
The Award:
8. The Industrial Tribunal delivered its award on 31stDecember 2003. A summary of the findings is in order.
(i) On the question of parity, the Tribunal while adverting to the judgment of Dr.Justice Radhakrishnan, noted earlier,formulated the issue as
follows:
Whether the principle of industry-cum-region so also the parity should be taken into consideration or only the parity and not the principle of
industry-cum-region?
The Tribunal held that while revising the pay scales, it was not only the principle of parity but the industry-cum-region principle which would have
to be applied. The application filed by employer at Exh.C-61 was dismissed;
(ii) On the basic wages, the Tribunal noted that the last wage revision had taken place by the Chitale Award of 20th June1974 and since then
increment rates had remained unchanged.The Tribunal held that with the increase in the cost of living, revision of wage scales was required. The
Tribunal noted that both according to HLL and the Union, Colgate Palmolive was a comparable concern. Whereas the working hours for Colgate
workmen were 192 hours per month, the workmen at HLL worked for 208 hours per month. The Tribunal held that hence, HLL must pay to its
workmen 8.33% more than what was paid by Colgate both in terms of basic wages and dearness allowance.The Tribunal noted that the witness
from Colgate who deposed in support of the Union had not provided adequate evidence in regard to actual fixation of salary, the span and total
wage packet in each of the concerned categories of Colgate. The Tribunal while rejecting the chart for wage fixation proposed by the Union came
out with the following suggestions:
With the conclusion supra, I would like to suggest that either Court of inquiry, or the Committee comprising The Unions'' representatives and the
representatives ofcompany, headed by independent expert be constituted to collect all the requisite details from Colgate Palmolive and for fixation
and revision of scales.
(iii) An additional House Rent Allowance was granted by the Tribunal at par with the workmen in Colgate overruling the objection of the
management that since such a demand had been given up in the wage settlement with the Head Office workmen,the workmen were not entitled to
an additional HRA over and above the HRA that is already being paid;
(iv) The existing Shift Allowance which was being paid at the rate of 12% of the basic wage for working in shifts with an additional amount of Rs. 3
per night shift was revised in line with what was being paid in Colgate;
(v) The workmen were granted two additional paid holidays in line with Colgate so as to provide twelve paid holidays in ayear;
(vi) The demand for revision of the existing pension scheme on the basis of the pension schemes in Life InsuranceCorporation, State Bank of India
and Government was not acceptable to the Tribunal and the Tribunal noted that Colgate Palmolive did not have a pension scheme. The Tribunal
held that the Union had failed to established a region-cum-industry practice to provide pension as a third benefit in addition to Contributory
Provident Fund. The Tribunal, however, considering the rise in Consumer Price Index allowed a revision of pension to the extent of Rs. 100/- in
each of the categories where monthly pension payments range between Rs. 100/- to Rs. 250/-. The period of pension which extends to 120
months from the date of retirement was not extended;
(vii) The Tribunal granted retrospective effect with regard to basic wages, adjustments, fitment and allowances from the date of the Charter of
Demands.
(viii) The Tribunal has granted a revision in respect of certain allowances on the basis of the settlement with the Head Office dated 20th February
2003. These allowances are (i) leave travelallowance; (ii) conveyance allowance; (iii) attendance allowance;(iv) social security allowance; (v)
special allowance; (vi) self development allowance; and (vii) lunch allowance.
(ix) The Tribunal allowed the demand of the Union for the conferment of permanency upon three workmen holding that they had completed 240
days'' continuous service as temporaries.The scope of the challenge:
9. HLL has, in the proceedings initiated before the Court under Article 226 of the Constitution, confined the challenge to the award of the Tribunal
in respect of the following areas, namely, (i)basic wages; (ii) additional HRA; (iii) shift allowance; (vi) grant of two additional paid holidays; (v)
pension; (vi) retrospective effect and interest; and (vii) filling up of vacancies. The Unions have in the two Writ Petitions instituted by them before
the Court,challenged the award of the Tribunal on the question of basic wages inasmuch the Tribunal directed that a Committee be constituted by
the management and by the Unions together with an independent expert for collection of data from Colgate Palmolive and for fixation and revision
of wage scales. The Unions seek that their prayer for a fixation of wage scales be allowed or in thealternative, the Tribunal be directed to fix wage
scales. In addition,the provisions of the award in regard to (i) adjustment increment;(ii) stagnation increment; (iii) retrospectivity; (iv) interest;
(v)pension; and (vi) permanency are sought to be impugned. The Unions submit that the claim to adjustment and stagnation increments was
erroneously disallowed; that the claim for benefits should not have been allowed only from the date of the Charter of Demands but from 1st
January 1996 which was the demand; that the claim for interest should be allowed on several other service conditions other than those enumerated;
that the grant of pension has to be revised upwards; and permanency should be granted to other apart from the three workmen to whom benefits
were granted.
10. For convenience of exposition, it would be appropriate for the Court to take up seriatim each of the grounds of challenge which came to be
urged on behalf of HLL and the Unions in assailing the award of the Tribunal Parity.
11. On 11th July 2003, HLL moved an application before the Tribunal for disposing of the References on the basis of parity.The immediate cause
for the application was that on 20th February2003, a settlement was arrived at between the management and the monthly rated staff of the Head
Office. HLL asserted that in the past whenever a settlement was signed either at the Head Officer at any of the establishments in the Mumbai
Region, the Unions sought to claim similar benefits on the basis of parity for the workmen at the other establishments. The Industrial Tribunal had
by several awards extended the benefits given in one establishment to another establishment on the basis of parity while disposing of the reference.
As an illustration, reliance was placed on the award of the Industrial Tribunal presided over by Shri Mehendale which was affirmed in a judgment
of a Learned Single Judge of this Court, Hon''ble Dr.Justice S.Radhakrishnan. HLL''scase was that the Head Office settlement dated 20th
February2003 should be extended mutatis mutandis to the workmen governed by the references. HLL''s case, it may be noted, was that those
demands which have been given up in the Head Office settlement should similarly be regarded as having been dropped from the pending
references. However, in so far as the issue Of retrospectively was concerned, the Company adopted the position that the workmen will not be
entitled to arrears or the payment ofinterest. The contention of the Union was that the settlement dated20th February 2003 is for the Clerical
category and while there was an unbroken history of parity in so far as common allowances are concerned between the clerical staff and
subordinate and hourly rated staff that parity did not extend to basic wages or retiralbenefits.
12. The Tribunal dismissed HLL''s application (Exh. C-61)seeking a disposal of the references on the basis of parity holding that while revising pay
scales, it is not merely the principle of parity but the industry-cum-region principle that would have to be applied.The Tribunal held that both these
principles would have to be applied ""harmoniously"".
13. The management has assailed the findings of the Tribunal and submitted that: (i) Having accepted the principle of parity in litigation involving the
Company and the Union, the Tribunal erred in rejecting the application of HLL and in proceeding to dispose of the references partly on the basis
of parity and partly on the basis of industry-cum-region; (ii) The Tribunal failed to apply the binding judgment of Dr.Justice Radhakrishnan sitting
asa Single Judge in this Court and that as a result imbalance would be caused in the service conditions of workmen working in various categories;
(iii) The judgment of the Learned Single Judge of this Court which attained finality was in effect a direction to maintain parity between
establishments of the same employer in the Mumbai Region by taking into account the total wage packet; (iv)The award of the Tribunal has
seriously disturbed the time tested differentials between different categories. The adoption of any benefit from the monthly paid staff settlement
would need to impose all the conditions attendant thereto as specified in The settlement for the hourly rated and service staff workmen to truly
reflect parity.
14. On the other hand on behalf of the Union, it has been submitted that (i) parity regarding wage scales must be as between workmen who belong
to the same or similar categories. Parity hasto be horizontal and not vertical: for instance a clerk in the Head Office can have parity in wage scales
with a clerk in the Factory or Research Centre, but there cannot be a parity in wage scales between clerks, skilled or semi skilled workmen, peons
and watchmen with regard to wage scales; (ii) Parity can exist between different categories of workmen with regard to such conditions of service
which are applicable to all workmen irrespective of the grades in which they are placed; and (iii) Without prejudice to the earlier submissions, the
Union was agreeable to accept The settlements dated 20th February 2003, 13th April 2004 and 26thAugust 2005 that were arrived at for the
clerical staff of the Head Office, Factory and Research Centre. The contention of the Union,however, was that the settlements constitute a
package deal of which individual terms and clauses are not severable. As a result though the demands of the workmen were granted with effect
from 1st March 2003, arrears and interest came to be allowed from 1987 and the grant of these benefits from 1987 constitute an intrinsic part of
the settlement.
15. While considering the question of parity, it would, as a matter of first principle, merit emphasis that the object of the principle is to ensure that
workmen engaged in similar categories in various establishments of the same employer in the same region do not suffer an imbalance of service
conditions. A clerk in theestablishment of HLL at the Head Office at Churchgate must,under the principle of parity, be similarly placed in the
determination of his service conditions as a clerk at the Factory or the Research Centre. This equivalence reflects a principle of horizontal parity:
parity in service conditions as between corresponding categories of workmen. Aside from horizontal parity which extends similar conditions to
workmen falling in similar categories in different establishments of the same employer in the same region, the second principle of equivalence is that
of verticalparity. Vertical parity applies independent of the categories involved in respect of those conditions of service or allowances which apply
to all workmen irrespective of the categories in which workmen may be engaged. Parity in the establishments of one and the same employer
particularly when they fall in the same region has a striking appeal in industrial jurisprudence because the raison d''etre is to ensure against an
imbalance in wages and service conditions which will otherwise result in industrial unrest.
The question of parity, however, cannot depend only upon a prior considerations since the overall pattern of industrial relations and the long
standing practice followed in the establishment of the employer quite often does have a material bearing on the pattern of wage fixation.
16. In the case of HLL the principle of parity has found recognition as a guiding basis for wage fixation for a period in excess of four decades. The
importance of applying the principle of parity in the Mumbai establishments of HLL finds a comprehensive judicial recognition in a judgment of a
Learned Single Judge of this court which has attained finality and which has been accepted by the parties. That judgment was a judgment rendered
by Dr.Justice S. Radhakrishnan on 29th October 2002 in Hindustan Lever Ltd. v. Hindustan Lever Employees'' Union 1Hindustan Lever
Employees'' Union, Hindustan Lever Mazdoor Sabha and the Union at the Research Centre were all parties to the proceedings before this Court.
Before the Learned Single Judge,HLL impugned the award of the Industrial Tribunal inter alia on the ground that the Tribunal had disposed of the
references ""merely on1 Writ Petition Nos. 1335/95, 1236/97, 1458, 1459, 1460 & 1478 of 1999 and Writ PetitionNos. 105, 106 and 114 of
2001.the basis of parity"" which according to HLL, was not sustainable.The Learned Single Judge, while repelling the submission noted that a parity
had been maintained right from 1952 and that a Division Bench of the Court had in fact, adverted to the injustice that would be caused if parity
were to be disturbed:
With regard to the above objection, one has to clearly bear in mind that right from 1952 (in) the Thakore Award which was a composite Award
dealing with Office Staff as well as Factory Staff the parity was maintained.Subsequent thereto, even in Bhojwani''s Award such a parity was
maintained. Apart from both the aforesaid Awards, the employer and the employees'' Union have arrived at the Settlement in 1979 with regard to
Sewri Factory and the same parity was adopted in The settlement with regard to the Head Office. Thereafter if one were to analyse the Dungaree
Award, the same parity was maintained in fixing the pay as well as the allowances. After that in the year 1983 the Settlement which was arrived at
with regard to the Head Office was again followed with regard to the Factory. Under the aforesaid facts and circumstances, specially from 1952to
1983 consistently for the period of almost 30 years,such a parity has been followed. Even the Division Bench of our High Court while delivering
the judgment in Writ Petition No. 864 of 1986 dated 6.9.1989, has held that such a parity has always been maintained, and infact, if such a parity
was not to be there, it would causeinjustice, and the Industrial Court by maintaining such a parity was held to be proper, as clearly observed in
paragraph 45 of the aforesaid judgment.
The Learned Single Judge then held that HLL itself had consistently extended settlements entered into with the workmen atthe Head Office to the
factory and the Research Centre or vice versa for almost thirty years:
In fact, as indicated hereinabove, the employer themselves has consistently extended the Settlement,once entered into between the Head Office
and there after extending it to the Factory and the Research Center or vice-versa. Based on the above, for almost 30years, the same parity was
maintained. Even the Division Bench order has stated that if there is deviation from the same, that would cause the injustice. Hence, Iam clearly of
the view that there is nothing perverse or illegal in adopting parity principle in the above awards.""The objection of HLL that there could be no
parity as between categories of workmen at the Factory, Head Office and the Research Centre was overruled with the following
observations:""Third main objection of ... the learned Counsel for the employer company is that the Industrial Tribunal has blindly granted parity,
inasmuch as various categories of workers in the Head Office, in the Factory and also in the Research Centre are different and they cannot be
treated on par. In fact, if one were to look at the Awards,the parity awarded is that if two increments are given to Head Office, the same kind of
increments are given to the factory staff. One cannot find fault on the ground that there are no similar categories in the Factory, the Head Office
and the Research Centre.
Finally the Court overruled the objection that there was no evidence to substantiate the grant of parity holding that right from1952 till 1983 a
consistent pattern of parity had been followed;such parity, the Court held, extended not merely in the matter of industrial awards of the Tribunal,
but in the matter of settlements between the employer and the Unions as well.
17. There is material on record to demonstrate the existence of parity in the service conditions that were applied to the workmen of the Head
Office on the one hand, and those at the Factory and the Research Centre on the other. The consistent practice finds judicial recognition in the
judgment of this Court. It is on the basis of a long standing and consistent practice of parity between the workmen at the three establishments in
Mumbai that HLL moved the application at Exh. C-61 for the disposal of the references in terms of the settlements which were arrived at on 20th
February2003 with the clerical staff at the Head Office.
18. Fairly before this Court Learned Counsel appearing on behalf of the Union accepted the principle of parity but submitted that the settlement
dated 20th February 2003 represents a package deal that was arrived at between the Union and the management and that all the terms and
conditions of the settlement must be regarded as a composite whole. The submission of the Union is that it is not open to the management to deny
the benefits of certain clauses of the settlement particularly those relating to retrospectively and interest when the grant of such benefits forms apart
of the overall scheme of the industrial settlement.
19. In order to appreciate the submission, it would be necessary for the Court to peruse some of the relevant provisions of the settlement dated
20th February 2003. The recitals in The settlement record that the bone of contention between the Union and the management which had come in
the way of a negotiatedsettlement, for nearly forty years, was a high rate of neutralisation given by the slab system of dearness allowance. The
settlement records that the Union had given up its demand in relation to basic wages upon which the management stated that it had agreed to enter
into negotiations for a settlement at the Head Officeestablishment. The settlement specifically records that it represents a package deal that was
arrived at between the parties,no part of which would be severable:
The parties have negotiated with a view to foster harmonious industrial Relations ... and have finally arrived at this settlement as a package deal,
which is a full and final settlement with respect to all pending demands of the Sabha and the Management in theestablishment at Head Office from
1987 till date of applicability of this settlement and in which no part of The settlement is severable from the others. In doing so The management
and the Sabha have looked at the total wage packet resulting from this settlement.
Parties agreed that the settlement would be in full and final settlement of all demands of the Union and that all demands that were not specifically
agreed to were dropped. During the period of its validity, until 20th February 2006, the Union agreed not to raise any additional demand which
would lead to a financial burden onthe management and parties accepted that the package of benefits provided thereunder would provide for
equitable and sustainedearnings. In the event of there being an arbitration/adjudication,parties were to apply in a joint application for an award in
termsthereof. Several provisions of the settlement emphasise that it constitutes a negotiated package, settling overall the conditions of service during
the tenure of the settlement. On the part of The Unions several proceedings which were pending in diverse Courts came to be withdrawn and an
assurance of productivity and discipline was given to the management together with a concession in regard to the right of the management to
introducerationalisation, standardization and improvement in techniques.The Unions gave up several demands including inter alia demands for
revision of basic wages, stagnation increments, additional HRA and pension. As an integral part of the settlement, Part-B of The settlement
provided that the management would pay arrears at certain rates with effect from 1st April 1987 together with interest atthe rate of 10% per
annum. The settlement provided that with effect from 1st March 2003, the benefit of several allowances would be extended including (i) social
security allowance; (ii) educationallowance; (iii) conveyance allowance; (iv) house rent allowance;(v) leave travel allowance; (vi) self development
allowance; (vii)acting allowance; and (viii) performance bonus. The management in the present case, while seeking a disposal of the references in
terms of the settlement dated 20th February 2003 sought on the one hand the concessions that were made by the Union as part of the settlement.
On the other hand, the contention of The management was that the workmen were not entitled to arrears allowed by Part B of the settlement dated
20th February 2003. The management contends that for the workmen governed by thereference to the Tribunal, an industrial settlement dated
10thJanuary 1992 held the field until 31st December 1995 and Clause15 of the settlement specifically provided thus:
The workmen agree that in consideration of the Company having agreed to their demands as above,they shall not either independently or jointly
raise another demand involving any financial burden on the Company during the period of this settlement and in particular shall not seek parity in
service conditions with employees in other units of the Company, consequent to terms and conditions of service at such Units being revised under a
settlement or award.
The term of the settlement expired on 31st December 1995 and the Charter of Demands dated 9th July 1997 was for a revision with effect from
1st January 1996. In these circumstances, thecontention of the management was that the workmen were not entitled to any retrospective benefits
prior to 1st January 1996 onthe basis of the Head Office Settlement.
20. The Tribunal had no justification for the summary manner in which the application filed by the employer at Exh.C-61was rejected. The
principle of parity on which the application of HLL was founded, is a matter of long standing industrial practice in the establishments of HLL in the
Mumbai Region to which the References relate. This long standing practice was consistently followed by extending industrial settlements entered
into at the Head Office to the Factory and the Research Centre and viceversa. The industrial practice was followed in extending industrial awards
of the Tribunal as well. Above all, the existence of parity was judicially recognised by this Court in a judgment which attained finality and which
was duly implemented. In the face of overwhelming material before the Tribunal, a careful appreciation of the issues involved was warranted. The
Industrial Tribunal instead proceeded to adopt the principle of parity in certain areas and the industry-cum-region principle in others. The manner in
which the industry-cum-region principle is applied would be considered subsequently.
21. The basic approach of the Tribunal suffers from a manifest error. The Tribunal has applied sporadic elements of parity (such as when it dealt
with the allowances that were granted by the industrial settlement) and elements of industry-cum-region with regard to other elements of the wage
package. Both the employer and the Union having accepted the fundamental precept of parity, it was for the Tribunal to consider as to whether the
employer was justified in denying the benefits of Part-B of the Head Office settlement relating to the settlement of past dues on the ground that the
demand of the Union was for a revision with effect from 1st January 1996 upon the expiry of the earlier settlement and that during the term of the
earlier settlement dated 10th January1992, Clause 15 ruled out such a demand. On the other hand, the plea of the Unions is that the industrial
settlement constitutes a package deal of which portions should not be severed. The Unions contend that when certain demands were given up in
the Head Office settlement, such as for revision of basic wages, the benefits granted by the settlement including past arrears comprised integral
elements of the overall package. An answer to these rival submissions was part of the adjudicatory function of the Tribunal which it has manifestly
failed to discharge. Instead, the answer which the Tribunal has found, does not do justice either to the principle of parity or, as this judgment would
subsequently explore,to the principle of industry-cum-region. A mismatch of the two principles does not allow for consistency in industrial
adjudication or foster the object of industrial peace. The entire approach of the Tribunal to the issue of parity was thus completely unsustainable.
22. A remand of the proceedings to the Industrial Tribunal would be warranted in order to enable the Tribunal to reconsider the whole issue of
parity afresh having regard to the observations contained both in the judgment of the Hon''ble Dr.Justice S.Radhakrishnan and in the present
judgment. If the Tribunal comes to the conclusion that the observance of parity amongst the three establishments of the same employer must
continue to be preserved in order to secure industrial peace, it would be essential for the Tribunal to lay down in the course of its adjudication in
appropriate package of service conditions and benefits that would ensure existence of parity. It is for the Tribunal to have regard to the overall
wage packet and to the benefits which the workers have received in the meantime. It is only appropriate and proper that a factual determination
should be made by the Tribunal in the first instance. Wide as the powers of this Court under Article 226 of the Constitution are, it is necessary that
an initial determination involving factual determinations be made by the Tribunal. the issues, as the previous discussion shows, involve drawing a
balance between conflicting claims. The primary determination must be made by the Industrial Tribunal in the exercise of the broad powers which
are conferred upon the Tribunal in matters of industrial adjudication.
Regioncumindustry
23. HLL has challenged the award of the Tribunal on the ground that in any event, if its submissions on parity were not to beaccepted, the principle
of industry-cum-region was not properly applied by the Tribunal both in the matter of basic wages and in determining the other allowances.
24. Decided cases have settled the parameters of the principle of region-cum-industry which has to be applied by Industrial Courts when they
adjudicate upon wage structures,dearness allowance and other conditions of service. In the practical application of that principle, the industrial
adjudicator has to consider wage scales which prevail in similar concerns in the region with which it is dealing. Similar concerns are those in the
same line of business as the concern in respect to which the dispute is being adjudicated. Moreover, even in the same line of the business, it is not
appropriate to consider ""a small struggling concern with a large flourishing concern"". Among the factors which the Industrial Court must consider is
the extent of the business carried on by the concern, the capital invested, profits made, the nature of the business, strength of the labour force, the
nature and extent of reserves, dividend declared, prospects of future business and other such facets. Where a concern pays the highest wages ina
particular line of business, there should be greater emphasis onthe region part of the industry-cum-region principle though the comparison has to be
with similar concerns in the same region.The principles are well settled. A reference may be made to the judgments of the Supreme Court in
French Motor Car Co. v.Their Workmen, 2 Indian Oxygen Ltd. v. Its workmen, 3 Novex Dry Cleaners v. Its Workmen, 4 Greaves Cotton and
Co. v. TheirWorkmen, 5 Polychem Limited v. R.D. Tulpule6 and Remington Rand of India Ltd. v. Their Workmen. 7 These cases emphasise that
in applying the industry-cum-region formula the total wage packet would be required to be considered both in the context of wages as well as
other allowances.
25. In the present case, the submission urged on behalf of HLL is that the Tribunal granted an increase of 8.33% in basic wages and Dearness
Allowance solely on the basis that the workmen at Colgate work for 192 hours (42 hours per week) as against HLL where the workmen work for
208 hours (48 hours perweek). This approach has been critised on the ground that HLL has different categories of workmen who work for 36, 42
and 48hours weekly. Moreover, the fact that working hours are more would not be a justification for an 8.33% increase in basic wages and
dearness allowance. Dearness allowance was not a demand referred for adjudication. The wages of those workmen in ""C"" Grade who work for
36 hours and those in ""T"" Grade who work for48 hours, have not been fixed on the basis of the differentials in working hours in the past, these
wages being existent as a result of awards and settlements. The award of the Tribunal has been challenged on the ground that there was in fact, no
application by the Tribunal of the principle of industry-cum-region. There was, it has been submitted, neither a consideration of the total wage
packet nor a comparison category wise of the workmen. Above all,it has been submitted that the Tribunal has abdicated its jurisdiction by failing to
determine the wages category wise and the direction of the Tribunal to constitute a Committee of the workmen, the employer and an independent
expert to collect data and fix The wages category wise shows a complete non-application of mind and a failure to exercise adjudicatory
jurisdiction.
26. On behalf of the Union, it has been submitted that considerable degree of difficulty that emerges in the application of the industry-cum-region
formula was obviated in the facts of the present case since the establishment of Colgate Palmolive at Mumbai was accepted by HLL and by the
Union as a comparableconcern. In fairness, it must be stated that even before this Court Learned Senior Counsel for both the contesting parties
accepted the factual position that Colgate Palmolive is regarded by the parties as a comparable concern. However, on behalf of HLL it issubmitted
that whereas Colgate had three grades, namely, Grades''A'', ''B'' and ''C''; HLL had more than ten Grades in the monthly rated and subordinate
staff and it was urged that the grievance of The management is that there was in fact, no adjudication at all; no consideration of corresponding
categories, no application of the region-cum-industry formula and an absence of application of mind to the wage packet.
27. The award of the Industrial Tribunal grants a flat increase in the basic wages and dearness allowance of 8.33% onthe foundation that while the
workmen in Colgate work for 192hours, their counterparts in HLL work for 208 hours. The challenge to the award on the ground that the Tribunal
failed to compare the corresponding categories of workmen in Colgate and in HLL mustexfacie be accepted. In para 53 of its award, the Tribunal
reflected an awareness of the necessity ""to know the exact fixation of scales and the total wage packet of each of the categories of the Colgate
workmen"" and to compare them with categories of workmen concerned with the references before the Tribunal on the basis of the nature of their
duties. The Union led the evidence of a Colgate representative, S.M. Shetty. The evidence of that witness was regarded by the Tribunal as
deficient. The Tribunal held that it is, therefore, not possible to accept the chart submitted by the Union:
He simply stated that on an average the increase is byRs. 2300/-. He has not stated as to what is actual fixation of salary, the span and total wage
packet of each of concerned categories of Colgate. Hence, it is not possible to accept the chart of proposed fixation submitted by Party No. 2. As
a result, I hold that the workmen concerned are entitled and First Party company is liable to revise the wage scales on par with Colgate Palmolive
but with 8.33% increase in basic and Dearness Allowance.
Having found serious deficiencies in the evidence, the Tribunal nonetheless proceeded to grant a flat increase of 8.33% in The wages and dearness
allowance principally if not wholly, on the basis of a difference in the hours of work between Colgate and HLL. There is absolutely no
consideration by the Tribunal of The wage scales prevalent in Colgate and in HLL as between corresponding categories of workmen.
28. The Tribunal abdicated its adjudicatory function by directing HLL and the Union to constitute a Court of Inquiry or a Committee consisting of
representatives of the parties and an independent expert . The directions issued by the Tribunal in that regard are as follows:
With the conclusion supra, I would like to suggest that either Court of inquiry, or the Committee comprising The Unions'' representatives and the
representatives ofcompany, headed by independent expert be constituted to collect all the requisite details from Colgate Palmolive and for fixation
and revision of scales.
The Industrial Tribunal which adjudicates upon a wage reference u/s 10 of the Industrial Disputes Act, 1947 has to perform the task of
adjudication and it does not require an elaborate line of reasoning to establish that the function of adjudication cannot be abdicated by a judicial
body. Parties and their experts can and must be allowed to produce evidence before the Tribunal but the task of adjudication cannot be delegated
to a third party. Adjudication constitutes the core of the judicialprocess. The law casts an obligation upon a judicial body toadjudicate. The
institutional framework of the Court imparts credibility and integrity to the process of adjudication. The Tribunal has in the present case, abdicated
that function. There is no determination of basic wages by the Tribunal. The award of the Tribunal, therefore, suffers from a fundamental error
which vitiates the exercise. The direction that the wages of each of the categories of workmen be revised at par with Colgate Palmolive onan
increase of 8.33% in basic wages and dearness allowance is indefinite and not capable of implementation. The entire exercise of determining which
are the corresponding categories in Colgate and HLL and of evaluating the total wage packet as well remains to be done and ought to have been
carried out by the Tribunal itself.The Tribunal has evidently failed to do so.On behalf of the Union, it has been submitted that thejudgment of the
Supreme Court in Hindustan Lever Ltd. v. B.N.Dongre, 8 demonstrates that a difference in the working hours can provide a justification for higher
pay scales for workmen. the submission was that a workman in Colgate who gets a basic wage of Rs. 100/- would receive an amount of Rs.
6,190/- together with dearness allowance. His counterpart in HLL would get Rs. 6,190/-plus 8.33% which is equivalent to Rs. 6,706/- comprising
of basic wages and dearness allowance. To arrive at this wage packet ofRs. 6,706/-, it was submitted that a basic wage of Rs. 116.62should be
given to the workmen. On this line of argument, it was submitted that a basic wage of the Colgate workmen of Rs. 100/-for 192 hours would be
equal to Rs. 116.62 as a basic wage in HLL for 208 hours of work.
29. Undoubtedly, the extent of work and the number of hours that are put in by workmen is a relevant consideration in determining wage scales.
Those who work more should be paidmore. The error of the Tribunal, however, lies in assuming that there is an invariable mathematical co-relation
between differentials in the hours of work on the one hand, and wages onthe other. Wage fixation is a far more complex exercise involving a8
1994 2 CLR 673 consideration of a host of relevant issues one of which would be the extent of work required for a job. The conditions of work,
the nature of functions and responsibilities, the corresponding categories which are being compared as between comparable concerns and the total
wage packet cannot be brushed aside or ignored in the application of the region-cum-industry formula.There is no comparative evaluation by the
Industrial Tribunal on the basis of the industry-cum-region formula.
30. During the course of the submissions an effort has been made on behalf of the Union to demonstrate that material was produced before the
Tribunal that would have furnished an adequate basis for an adjudication by the Tribunal. For instance, it was submitted that the conditions of
service of the Colgate workmen were produced on the record of the Tribunal, these being in the form of settlements that were entered into
between the years1962 and 2000. The Union submitted that the corresponding categories of workmen ""are more or less admitted"". Reliance was
placed on a chart produced by the management at Exh.C-20 and it was submitted that the chart showed how the basic wages of HLL workmen
could be equalised with the workmen in Colgate. The Union, it was submitted, had worked out an equivalent of basic wages of HLL after factoring
a rise of 8.33%. The Union, it was submitted, had produced comparisons with the 1995 and 2000settlements with Colgate. On the other hand, it
was urged that it was the management who had failed to produce a comparison of the total wage packet in Colgate and HLL and an adverse
inference ought to be drawn. The submission that The management''s chart, Exh.C-20, showed how the wage scales of HLL workmen could be
equalised with Colgate would not be an appropriate reading. The award of the Tribunal9 as well as the written submissions filed by the
management10 would clearly demonstrate that the chart at Exh.C-20 was not an admission onthe part of the management but was filed only to
demonstrate what according to the management was a misrepresentation that was made by the Union. There is no merit in that submission.
31. The submission which has been urged on behalf of The Union boils down to an argument that while the Tribunal abdicated its jurisdiction to
adjudicate upon the demand of basic wages, such an exercise could, in fact, have been carried out by the tribunal and this Court in the exercise of
its jurisdiction under Article 226 of the9 Page 114 of the Paper Book10 Compilation page 807Constitution should do so. The jurisdiction of the
Court under Article 226 is undoubtedly wide, and the width of that jurisdiction was explained by the Supreme Court in Gujarat Steel Tubes Ltd.v.
Gujarat Steel Tubes Mazdoor Sabha. 11 The High Court in the exercise of the supervisory jurisdiction is governed by settledparameters. Where
the Award of the Industrial Tribunal is based on evidence produced before the Tribunal, the High Court in its jurisdiction under Article 226 of the
Constitution would be loathe tointerfere. Where the Tribunal carries out the exercise of wage fixation in the first place, based on a consideration of
relevant evidence and the underlying principles that emerge from decidedcases, the High Court ordinarily would not interfere. However, the
present case is one where there has been an abdication on thepart of the Tribunal in adjudicating upon the demand for a revision of basic wages.
The adjudicatory function has been left to a third party. In such a case, it would be wholly in appropriate for the HighCourt in the exercise of its
jurisdiction under Article 226 of the Constitution to act as a primary fact finding authority or as primary adjudicator. In industrial law, that
jurisdiction is vested by the Industrial Disputes Act, 1947 with the Tribunal to whom a11 Gujarat Steel Tubes Ltd. and Others Vs. Gujarat Steel
Tubes Mazdoor Sabha and Others, . reference to adjudication is made. The function of the High Court essentially is to ensure that the Tribunals
keep within the bounds of their authority in exercising the power of adjudication. The HighCourt would not be justified in substituting itself for the
Industrial Tribunal in the delicate and sensitive task of determining wage scales in the first instance. That exercise must be carried out by the
Tribunal and it is that exercise which the Tribunal failed to carry out in the present case.
Shift Allowance:
32. The Industrial Tribunal has allowed a revision in the shift allowance at par with what is being paid to the workmen atColgate. The submission
that has been urged on behalf of HLL is that the Tribunal has increased the shift allowance without consideration of the total pay packet. Now in so
far as the shift allowance is concerned, it would be material to note that the Head Office Clerical staff does not work in shifts and the shift
allowanceis, therefore, not an issue material to them. The undisputed position is that the shift allowance is not a new condition of service.The
allowance was being paid even prior to 1952 after which it was revised. The Tribunal has noted that the shift allowance is being paid for work in all
three shifts though an additional amount is paid for every night shift of work. The management had accepted that Colgate was comparable. The
revision in the shift allowance by the Tribunal so as to be at the same level as what was being paid to the Colgate workmen does not in
thesecircumstances, warrant any interference of the Court under Article 226 of the Constitution.
Additional House Rent Allowance:
33. The Industrial Tribunal has allowed the demand foradditional House Rent Allowance (HRA) on par with what was being paid to the workmen
at Colgate Palmolive. The submission of HLL is that the Tribunal has not made any comparison of the figures with the additional HRA that was
being paid at Colgate.The second submission is that in the settlement of 20th February2003 which was entered into in respect of the clerical and
technical categories of workmen at the Head Office'' the Unions expressly gave up the demand for any form of HRA over and above what was
payable under the Maharashtra Workmen Minimum House Rent Allowance Act with effect from January 1999. The settlement records this
concession in Clause 4(d) of Part-B and stipulates that with effect from 1st March 2003 only the statutorily payable HRA was admissible to the
employees.
34. The submission of the Unions in response is that the awarded HRA is that which is paid to the workmen at Colgate or statutory HRA,
whichever is higher. This service condition has, it is submitted, been implemented and arrears have been paid. The Unions urged that from 1991,
the clerical staff at the Head Office was in receipt of additional HRA over and above the statutory HRA.The workmen covered by the award in
the present case were,however, not granted that benefit. Hence, there was no parity in regard to HRA between the clerical staff of the Head Office
and the workmen covered by the award from 1991. The Head Office settlement dated 20th February 2003 discontinued allowances prospectively
from 1st March 2003. Since the Company itself refused to grant additional HRA to the workmen covered by the award since 1991, it is according
to the Union, unfair on the part of HLL to deny HRA at par with Colgate on an argument of parity with the Head Office clerical staff. Moreover, it
has been submitted that the workmen at the Head Office gave up the demand for additional HRA on the basis of the total wage packet which is
not being extended to the workmen covered by the award. Finally, it has been submitted that the actual amount granted by way of HRA is less
than the actual amount received by the workmen under the Head Office Settlement.
35. The rival submissions of the parties reveal that the essential difference between HLL and the Unions turns on the question of parity. HLL
asserts that the workmen at the Head Office gave up the demand for the payment of an additional component over and above what is payable
statutorily towardsHRA. HLL''s submission posits that parity must be maintained in regard to this allowance as well. The Unions on their part
assert that the giving up of the demand for an additional component towards HRA in the Head Office Settlement was a composite part of an
overall settlement which cannot be read in isolation from the other benefits that the settlement allows. The clauses of The settlement have already
been adverted to in the earlier part of this judgment and those clauses clearly stipulate that the concessions granted by the Unions by dropping
certain demands were part of an overall package. The preamble to the Settlement records that the settlement itself is ""a package deal"" and there is,
therefore,merit in the submission urged on behalf of the Unions that the dropping of the demand by the Union in the Head Office Settlement cannot
be disassociated from the overall package of benefits that was granted by the settlement. Considering one clause of The settlement in isolation
would, therefore, not be a valid interpretativedevice. Nor for that matter would reading a clause of The settlement in isolation with the others, do
justice to the intention of the parties or to the process of collective bargaining. Having saidthat, the fact remains that the ultimate view which would
be takenin regard to an allowance such as an additional HRA which has-been granted on the basis of region-cum-industry (more specifically on a
comparison with Colgate) would depend upon what view the Tribunal would take on the issue of parity in the first instance. If the Tribunal were to
hold that a parity in regard to conditions of service ought to be maintained on the ground that such parity existed between the three establishments
in the Mumbai Region,the grant of an additional HRA only to the workmen covered by the award would run counter to the principle of parity. This
Court in the earlier part of the judgment already having made it clear that a reconsideration by the Tribunal of the whole issue of parity was
warranted afresh, it would be necessary to leave the issue of the payment of additional HRA for reconsideration by the Tribunal in the light of its
determination of the question of parity. The Unions have submitted that in the meantime, payment has been made of arrears to the workmen and if
this be so, the Tribunal upon remand will undoubtedly take note of the amount thus paid when it considers the overall wage packet as a part of a
fair adjudication.
Pension:
36. On the issue of pension, both HLL and the Unions are aggrieved by the award. Pension is an existing condition of service for the workmen
who are covered by the references to adjudication in this case. The workmen had been drawing pensionary benefits ranging from Rs. 100/- to Rs.
250/- per month for a period of 120months after retirement under the terms of a Settlement of 1983.The claim for revision was to enhance
pensionary payments to50% of the last drawn basic pay with the existing scheme of dearness allowance for a minimum period of fifteen years. the
workmen had sought to place reliance on the pensionary benefits available in the State Bank of India. The Tribunal held that since the case of the
workmen themselves was that Colgate Palmolivewas a comparable concern and there are other industries which carry on business similar to that of
HLL, it was not advisable to rely on the scheme for pension available to State Bank of Indiaemployees. The Tribunal, also held that the pension
scheme in Life Insurance Corporation and the Government were on a completely different footing. The Tribunal noted that admittedly Colgate
Palmolive did not have any pension scheme. the workmen at the Head Office of HLL were, according to the Tribunal, granted a Social Security
Allowance. Colgate Palmolive had a Joint Saving Scheme. The Tribunal found that the demandfor pension had not been duly justified on the basis
of region-cum industry or by demonstrating the total cost of pensionary payments as part of the overall wage packet:
On merits, the demands for pension ought to have been justified by the unions on the basis of region-cum industry and having done so it ought to
have factored the cost of providing pension as a part of total packet. The Second Party Unions failed to show that there is any region-cum-industry
practice to provide pension as a third benefit in addition to contributory fund.
The Tribunal was of the view that such pensionary payments should not create an imbalance in the total wage packet and an increase in the
monetary burden on HLL would reflect on the production cost. The actuary who gave evidence on behalf of The management stated that the cost
of providing pension would beRs. 78.88 crores for the Factory, Rs. 5.96 crores for the Research Center and Rs. 2.3 crores for the Head Office.
D.W. 5 who was examined by the Unions stated that no evidence of an actuary was going to be produced on behalf of the workmen. In the
settlement that was arrived at with the Head Office, the demand in regard to pensioner payments was withdrawn in view of the increase the Social
Security Allowance and the increase in the total wage packet. The Social Security Allowance was increased fromRs. 485/- per month to Rs. 785/-
per month from 1st March 2003.The Tribunal held that the existing pension scheme and its correlation to the demand for gratuity was pending in
two other references with regard to the hourly rated and monthly paid workmen at the Research Centre and the hourly rated and monthly rated
subordinate staff of the Factory. Ultimately, after a discussion along the aforesaid lines, the Tribunal held that the only consideration for granting an
increase in pension is the steep rise in the Consumer Price Index which ""may be sufficient reason for increasing present amount of pension to some
extent"". the Tribunal proceeded to grant an increase in pension of Rs. 100/-each in all the categories for which present pensionary payments range
between Rs. 100/- to Rs. 250/- per month. The existing period of 120 months after retirement for providing Pensioner payments has not been
increased.
37. On behalf of HLL , it has been submitted that the service conditions in HLL contemplate four retiral benefits: (i) ProvidentFund; (ii) Family
Pension under the Provident Fund Scheme; (iii)Gratuity; and (iv) Pension. HLL submitted that in the Head Office settlement, the demand for
pension was withdrawn and the Social Security Allowance was increased from Rs. 485/- to Rs. 785/- permonth. The award of the Industrial
Tribunal, it was submitted, has granted Social Security Allowance as payable under Clause 4(a) of Part-B of the Head Office Settlement and it
was submitted that hence in these circumstances, there was no basis either for the payment of or for the enhancement of pensionary payments. In
sum and substance, therefore, the submission was that (i) The factor of four retiral benefits being available; and (ii) The grant of the Social Security
Allowance at par with the Head Office settlement has not been considered by the Tribunal in its award.
38. On the part of the Unions, it has been submitted that two retiral benefits, namely, Provident Fund and Gratuity were uniform for all categories
of workmen. The parity in regard to gratuity was broken when the Rane Award dated 17th September 1983 granted to the clerical staff of the
Head Office a higher rate of gratuity -75% of the last drawn salary for every completed year of service, in the case of workmen who had
completed fifteen years of service.Moreover, the monetary ceiling was replaced by a variable ceiling.Hence, it has been submitted that as a result,
the gratuity for clerical staff works out to approximately 75% of the last drawnsalary. The Company declined to extend the Rane Award to the
workmen covered by the three references in question. By a settlement of 17th September 1983 as applicable only to the hourly rated and
subordinate staff, pension was introduced as a condition of service, valid for ten years after retirement at monthly payments ranging from Rs. 100/-
to Rs. 150/-. The Unions have, therefore,submitted that the principle of parity did not extend to clerical staff with regard to pension and when the
demand for pension was dropped in the Settlement dated 20th February 2003, pension was not an existing service condition for them. It is also
submitted that the mere fact that the service condition of pension did not exist in a comparable Company in the industry does not disentitle the
workmen from justifying such a claim otherwise no new condition of service would ever be established. The Employees Pension Scheme in HLL is
not in addition to Provident Fund. The pension of the Head Office service staff was revised in 1992 when they received Rs. 250/- as monthly
pension. The amounts payable to the Factory and Research Centre workmen, however, remained atRs. 100/-, Rs. 125/- and Rs. 150/-. The
Tribunal granted an ad-hoc increase of Rs. 100/- which was unrelated to the object sought to beachieved, namely, the protection of the value of
pension from being eroded by a rise in the cost of living. The Unions, therefore, on their part are aggrieved by the award of pensionary payments,
in so far as it only granted an ad-hoc increase of Rs. 100/- per month.
39. In dealing with the issue of pensionary payments, it would, at the outset, be material to deal with the submission of The management that the
demand for pensionary payments was given up by the Unions in the Head Office Settlement. Clause 4(i) in part-B of the Head Office Settlement is
to the following effect:
4.i. PENSION
The Sabha agrees to withdraw their demand with reference to Pension in view of the increase in the Social Security Allowance and the increase in
the total wage packet.
Clause 4(i) would, therefore, show that the demand for Pensioner payments was withdrawn by the Union when the Head Office settlement was
negotiated not only on the basis of the increase in the Social Security Allowance, but in view of the increase in the total wage packet as well. The
Social Security Allowance was increased from Rs. 485/- per month to Rs. 785/- per month with effect from 1st March 2003 and the benefit of
this increase which was granted by the Head Office Settlement was extended by the award to the workmen covered by the references. The error
in the line of reasoning in the submission of HLL lies in equating the withdrawal of the demand for pension in the Head Office settlement with an
increase simplicitor in the Social SecurityAllowance. Apart from the increase in the Social SecurityAllowance, there are two additional factors
which cannot beignored. The first is the fact that the increase in the total wage packet that was granted by the terms of the settlement was stated by
the settlement itself to be a reason for the withdrawal of thedemand. The Union has drawn the attention of the Court to thefact that the arrears
which were granted to the clerical staff by way of the settlement work out to about Rs. 2, 69,815/- over and above what they would have been
entitled to had the benefits granted to them, been confined to what they had demanded and were entitled to by way of parity. The second
circumstance is that the parity in the matter of gratuity was broken consequent upon the Ran Award of 20th February 1983 when the clerical staff
at the Head Office was granted a higher rate of gratuity. The settlement dated17th September 1983 introduced pension as a condition of service to
the hourly rated and the subordinate staff valid for a period of tenures after retirement at rates between Rs. 100/- to Rs. 250/- permonth. When the
pensions of the Head Office service staff were revised in 1992, those of the Factory and Research Center remained he same. The submission of
the workmen have an Employee Pension Scheme in addition to Provident Fund may not be entirely accurate as it has not been disputed before the
Court that the scheme has been created by diversion of the employer''s contribution to the Provident Fund, thus reducing the Provident Fund to
that extent.
40. There is merit in the submission which has been urged on behalf of the Union that the approach of the Tribunal to the entire issue of pensionary
payments is perfunctory. The Tribunal has in the ultimate analysis granted an ad-hoc increase of Rs. 100/-per month based upon the increase in the
Consumer Price Index.Undoubtedly a revision of the pensionary payments cannot be considered in isolation from the over all wage packet and the
consequential burden that would be placed on the employer. The circumstance in which pensionary benefits came to be introduced by the
settlement of 17th September 1983 constitutes important background material as does the object and purpose of theprovision. Protecting
pensionary payments from erosion consequential to the increase in the cost of living, is an important aspect of the adjudicatory function. The ad-
hoc increase granted by the Tribunal was not part of an interim but a final award. A final award of adjudication has to be based upon a careful
evaluation of all the circumstances. An order of remand would be warranted so as to enable the Tribunal to consider afresh the demand for
revision in pensionary benefits.
RETROSPECTIVITY:
41. The Industrial Tribunal granted retrospective effect to its award of basic wages, adjustments, fitments and allowances from the respective dates
of the Charters of demand. In the threereferences,the Charters of demand were submitted on 23rdFebruary 1996, 9th July 1997 and 29th
October 1998. In paragraph111 of the Award, the Tribunal allowed the demand for allowance son the basis of the Head Office Settlement dated
20th February2003. The Head Office Settlement provides that the allowances as settled would be given effect to from 1st March 2003. the
submission of HLL is that since the allowances that have been granted in paragraph 111 of the Award have specifically been granted with
reference to the Head Office Settlement and The settlement provided that the allowances would be with effect from1st March 2003, the Tribunal
should not have disturbed parity by allowing the demand with effect from the date of the Charters ofDemand.
42. The Unions have drawn the attention of the Court to thefact that in the Charters of Demand, there was a separate demand in regard to
retrospectivity and interest. The Unions made that demand for retrospectivity with effect from 1st January 1996. The scheme of the demands was
that individual allowances we reclaimed together with a particular quantum whereas the grant of retrospective revision was dealt with separately. In
the application at Exh. C-61 that was filed by the management, HLL submitted that the demand for retrospective effect should be rejected since in
any event the workmen were receiving an additional quantum ofRs. 1500/- with effect from 23rd June 1998. In respect of certain demands,
basically consisting of those allowances to which all workmen were entitled irrespective of category and grade, A purshis came to be filed by
consent before the Tribunal by which benefit was granted on the basis of the settlement entered into atthe Head Office with clerical staff. The
Union stated while filing the Purshis that the demand in respect of allowances may be granted in terms of the Head Office Settlement without
prejudice to the contentions of the parties including retrospective effect. By an endorsement on the Purshis, the representative of the Company
recorded that HLL had already furnished its view in Exh. C-61 and it stood by that position in respect of allowances, basic wages,retrospective
effect and pension as more particularly statedtherein. The sequence of events supports the submission of The Unions that the demand for
retrospective operation was kept open when parties agreed that some of the allowances which were granted under the settlement at the Head
Office should also be given to the workmen covered by the award. In paragraph 8 of the award, the Tribunal also observed that the allowances
covered by the Purshis were disposed of by consent in terms thereof.Paragraph 10 of the award of the Tribunal contains a tabular statement of the
demands that remained for adjudication and these included the question of retrospective effect. From the material placed on record, it is clear that
the demand of the Unions for the grant of the benefits with retrospective effect was open foradjudication.
43. An Industrial Tribunal adjudicating upon a wage reference has, in view of the well settled principle of Industrial Law,the jurisdiction to
determine the date with effect from which should be allowed. The presentation of the Charter of Demands or, for that matter, the date of the
reference are valid parameters for the grant of retrospectivity and it is for the Industrial Tribunal in each case to determine what should be the date
with effect from which revision should take place. The earlier settlement dated 10th January 1992 with the subordinate staff came to an end on
31st December 1995. The Charter of Demands dated 9th July 1997 provided that it was with effect from 1st January 1996that the demands were
raised. Clause 15 of the settlement of 10thJanuary 1992 had provided that the workmen shall not raise another demand involving a financial burden
on the Company during the period of the settlement and shall not '', seek parity in the service conditions with employees in other Units of the
Company, consequent to terms and conditions of service at such Units being revised under a settlement or award.
44. As an abstract principle of law, therefore, the Tribunal like another Industrial Tribunal adjudicating upon a wage reference had the jurisdiction
to hold that the benefit of the wage revision should be with effect from the date of the Charter . The workmen are aggrieved because the Tribunal
didn''t grant a wage revision with effect from 1st January 1996 which is the date with reference to which the Charters of demand claimed a
revision. The management has a more fundamental grievance onthe ground that even if the question of retrospectivity was open foradjudication, the
Tribunal was not justified in granting retrospective effect to those allowances which were granted on the basis of the Head Office Settlement. The
Tribunal allowed the benefit of the allowances in paragraph 111 of the Award of the Tribunal specifically on the basis that those allowances were
granted in the Head Office Settlement. That Settlement specifically prescribes the date for the grant of allowances as 1st March 2003.
However,the settlement gave a package of benefits to the workers, among them being arrears as provided in Part-B of the Settlement
towards''settlement of past dues''. Since the wider issue of parity is being left open for a fresh decision by the Tribunal, it would consequently be
appropriate and proper if the question of retrospectivity is left to be determined afresh by the Tribunal having due regard inter alia to its finding on
the issue of parity. If parity is to be maintained, the outcome of the consequential issue must follow. Contrariwise, If the Tribunal comes to the
conclusion that for cogent and valid reason the principle of parity has to be departed from, that in turn will affect the nature and extent of
retrospectivity to the demands which are allowed by the Tribunal. In these circumstances, the issue of retrospectivity shall be considered afresh by
the Tribunal in the course of the adjudication upon remand.
INTEREST:
45. The award of the Tribunal granted interest at the rate of10% p.a. with respect to HRA, LTA and the self development allowance. On this
aspect, the Unions have submitted that while the Tribunal in the course of the discussion held that the workmen were otherwise entitled to the
allowances and to the other monetary benefits of which they were deprived, there was no reason for the Tribunal to grant interest on arrears only
on the three allowances spelt out in the Award of the Tribunal. The issue of interest being consequential in nature, it would be appropriate and
proper that the Tribunal is directed to reconsider the entire issue upon remand. There shall be an order accordingly.
ADJUSTMENT INCREMENT AND STAGNATION INCREMENT:
46. The finding that has been arrived at by the Tribunal is asfollows:
In view of the direction for wage scales revision, it is not necessary to record the findings on the issues ofincrement, fitment, adjustment, stagnation
and span.Since increase by 8.33% in basic and Dearness Allowance is granted, I see no justification in granting adjustment and stagnation
increment. The prayer '' rejected.
47. The Unions have challenged the award on this aspect onthe ground that the Tribunal has not recorded any finding on merits and the demand
was rejected only on the ground that a revision of wage scales has been granted. The Unions contend that in every settlement the workmen at
Colgate have been granted adjustment and stagnation increments apart from wage revision. The demand for stagnation increment is only for the
workmen at the Head Office and the demand has been made on the prevailing pattern inColgate.
48. The Tribunal has declined to consider the demand only on the ground that an increase of 8.33% has been granted in the basic wage and
dearness allowance. Since this Court has set aside the finding of the Tribunal in regard to the 8.33% increase, it would be appropriate to keep the
issue of adjustment and stagnation increments open for reconsideration by the Tribunal onremand. There shall be an order accordingly.
LEAVE FACILITY:
49. The Tribunal granted two additional paid holidays on that this would be at par with Colgate. HLL''s submission is that this increase has been
granted without considering the total leave facilities available to the workmen. Moreover, it has been submitted that there is a valid distinction
between operatives who perform manual work and clerical staff: Under the Bombay Shops and Establishments Act, 1948, which applies to
commercialestablishments, the annual leave provisions are provided for in Section 32 (21 days per annum) while '' 79 of the Factories Act, 1948,
leave provided is of one day for every 20days of work (amounting to 15 days in a year). In The circumstances, it has been urged on behalf of the
management that a difference in paid holidays between employees of commercial establishments such as the Head Office and operatives employed
in Factory establishments such as those at Sewri and the Research Centre is valid.
50. In Alembic Chemical Works Co. v. Its Workmen, 12Justice P.B. Gajendragadkar (as the Learned Chief Justice thenwas) while speaking for a
Bench of three Learned Judges of the Supreme Court, noted that it is not seriously disputed that a distinction has generally been made between
operatives who do manual work and clerical and other staff. The Court noted that it is also not disputed that in practice such a distinction is made
by comparable concerns. A distinction between the two categories of12 Alembic Chemical Works Co. Ltd. Vs. The Workmen, employees was
held to perfectly justifiable so that no question of discrimination would arise. Equally significant is the observation of the Supreme Court to the
effect that while industrial adjudication seeks to achieve social justice, unduly liberal provisions in the matter of leave may affect production and,
therefore, the interest of the general community:
There is no doubt that when industrial adjudication seeks to do social justice, it cannot ignore the needs of national economy; and so in considering
matters ofleave, either in the form of privilege leave or sick leave,the tribunals should not ignore the consideration that unduly generous or liberal
leave provisions would affect production and obviously production of essential commodities is in the interest of not only the employers and the
employees but also of the general community.
In Indian Oxygen Ltd. v. Its Workmen (supra), the Supreme Court while setting aside an award of the Tribunal which had increased the number of
paid holidays, again emphasised that the need for maintaining productivity meant that absence from work should not be unduly encouraged. The
Court observed as follows:
In the appellant company, the office staff was getting 21days as annual leave and 17 days on account of festival and national holidays, that is, 38
days of paid absences;other factory staff was getting 21 days as annual leave and 10 days on account of festival and national holidays,that is, a
total of 31 days of paid absences. As a result of the award, the office staff in the appellant company would be getting 47 days of paid absences on
full pay and the factory staff 40 days of such absences. We can see no reason for this increase of paid absences which is clearly and distinctly
above the pattern in the comparable concerns in that region. It is hardly necessary to say that, especially at the present time,emphasis in the country
should be more on increasedproduction, and absence from work should not be unduly encouraged.
In the present case there is merit in the submission urged on behalf of the management that the Tribunal was completely in error in proceeding to
grant an increase in the leave facilities merely on the ground that such facilities were available in Colgate and that at the Head Office 15 days'' paid
holidays were available. The Head Office is a commercial establishment. Statutory provisions such as those in the Bombay Shops and
Establishments Act, 1948, on the one hand and the Factories Act, 1948, on the other demonstrate that a valid legislative classification has been
made between commercial establishments on the one hand and production unit son the other. That such a distinction is valid and intelligible is also
clear from the law laid down by the Supreme Court. In thejudgment in Alembic which is of 1961 and the subsequent judgment in Indian Oxygen
which is of 1963 the Supreme Court emphasised the importance of maintaining production levels. The observations of the Supreme Court apply
with as much force today when the needs of a competitive business environment cannot beignored. Industrial adjudicators must be conscious of the
need for industrial organisation to be efficient, flexible and productive.Granting additional paid holidays is not a matter of largesse to be doled out at
the arbitrary discretion of the industrial adjudicator.The Industrial Tribunal did not find that the existing provisions in regard to leave were in
adequate. That is not in fact the contention of the Unions even in the arguments before this Court. the question is not merely of the grant of two
additional holidays, but ofa fundamental fallacy in the approach which the decision of the Tribunal discloses. The award of the Tribunal in this
regard is, therefore, completely without basis and foundation and is accordingly quashed and set aside.
VACANCIES:
51. The Tribunal has directed the grant of permanency to three workers on the ground that they were entitled to the benefit by virtue of having
continuous service of 240 days. Learned Senior Counsel appearing on behalf of the Management stated before the Court that the Management
does not press the challenge in regard to the conferment of permanency on the three workmen viz;Sarvashri Lobo, Jitendra Dulera and S.S.
Mirkar; without prejudice to the submissions of HLL on other aspects under this head.
52. The Unions have challenged the Award on the ground that relief was not granted by the Tribunal of permanency to all temporary workmen
working on rotation and that similar relief should be granted to four temporary peons and six temporarySweepers.
53. On behalf of the management, it was urged that (i) There was no evidence to show that the persons had put in 240 days of service; (ii) None
of the workmen concerned had stepped into the witness box to give evidence and the two witnesses who deposed on behalf of the Unions did not
depose in respect of any particular temporary workman; and (iii) In view of the settled principles oflaw, mere affidavits and self serving statements
made by workmen were not sufficient.
54. Now it is a well settled principle of law, following thejudgment of the Supreme Court in Range Forest Officer v. S.T.Hadimani, 13 that it is for
the claimant to lead evidence to show thathe has worked for 240 days in a year preceding his termination and that the filing of an affidavit is only a
statement of a claimant which cannot be regarded as sufficient evidence for the Court or the Tribunal to come to the conclusion that the workman
had worked for 240 days in a year. The decision in Hadimani, has since been followed in several judgments of the Supreme Court which have
been elaborately considered in R.M. Yellatti v. Assistant Executive Engineer. 14 Mr. Justice S.H. Kapadia speaking for a Bench of three Learned
Judges held as follows:
This Court has repeatedly taken the view that the burden of proof is on the claimant to show that he had worked for 240 days in a given year. This
burden is discharged only upon the workman stepping in the witness box. This burden is discharged upon the workman adducing cogent evidence,
both oral anddocumentary. In cases of termination of services of daily-waged earners, there will be no letter of appointment or termination. There
will also be no receipt or proof of payment. Thus in most cases, the workman (the claimant)can only call upon the employer to produce before the
court the nominal muster roll forthe given period, the letter of appointment or termination,if any, the wage register, the attendance register,
etc.Drawing of adverse inference ultimately would depend thereafter on the facts of each case. The above decisions however make it clear that
mere affidavits or self-serving statements made by the claim workman will not suffice in the mater of discharge of the burden placed by law on the
workman to prove that he had worked for240 days in a given year. The above judgments further lay down that mere non-production of muster
rolls perse without any plea of suppression by the claimant workman will not be the ground for the Tribunal to drawn adverse inference against the
management.
Neither of the workmen in respect of whom the Unions seek the benefit of permanency stepped into the witness box in support of their respective
cases. The burden of establishing the length of service cannot be cast upon the management since that would be contrary to the position in law laid
down by the Supreme Court.
The burden had to be discharged by the Workmen concerned stepping into the witness box and adducing cogent evidence, or a land
documentary. The burden has not been discharged.
55. Item 11 of Schedule IV of the Industrial Disputes Act,1947 refers to any increases or reduction in the number of persons employed or to be
employed in any occupation or process or department or shift, not occasioned by circumstances over which the employer has no control. Under
Item 10 of Schedule V an unfair labour practice consists in employment of workmen as badli,casuals or temporaries and to continue them as such
for years with the object of depriving them of the status and privileges of permanent workmen. On behalf of the Unions, UW2 deposed that there
was a reduction in the strength of permanent peons whileUW3 deposed in regard to Sweepers and Coolies.
56. In Hindustan Lever Ltd. v. R.M. Ray, 15 The Supreme Court held that workers were not entitled to make a grievance onthe ground that while
there had been a number of voluntarily induced retirements, many of the posts were not filled after the holders of those posts had retired or left. In
so far as Item 11 wasconcerned, the Supreme Court held that it was necessary to establish that the workers were adversely affected. In the
present case, the evidence on the record clearly fell short of establishing that the management had employed casuals or temporaries for years with
the object of depriving them of the status of permanent workmen. The award on this count consequently cannot be sustained and will have to be
quashed and set aside.
CONCLUSION:
57. For all these reasons, I am of the view that there is considerable degree of merit in the challenge preferred by The management to the legality
and validity of the award of the Tribunal. The management has challenged the award, as notedearlier, in respect of (i) Basic wages; (ii) Additional
HRA; (iii)Retrospective effect and interest; (iv) Filling up of vacancies; (v)Pension; (vi) Grant of two days additional paid holidays; and (vii)Shift
allowance. HLL has stated before the Court that it has accepted the award in so far as it relates to the conferment of permanency on three
workmen. Save and except in regard to the grant of shift allowance, and permanency to three workmen whose names are noted above, I am of the
view that rule will have to be made absolute in terms of prayer (a) of the petition filed by HLL.The proceedings shall stand remitted back to the
Industrial Tribunalfor reconsideration in the light of the observations contained in this judgment. Upon remand, the Tribunal shall endeavour an
expeditious disposal, preferably within a period of six months from the date on which a certified copy of this order is produced beforeit.
58. In so far as Writ Petition 1003 of 2004 filed by The Unions is concerned, there is a challenge to the award of the Industrial Tribunal in regard
to (i) The directions to constitute a Committee in the matter of collecting data and revising the basic wage scales; (ii) Adjustment increment; (iii)
Stagnation increment;(iv) Retrospectivity; (v) Interest; (vi) Pension; and (vii) Permanency.In so far as prayers (a-i) to (a-vi) are concerned, the
petition shall stand disposed of in terms of the directions already issued in the body of the judgment. Prayer Clause (a-vii) is rejected.
59. In so far as Writ Petition 1004 of 2004 is concerned,prayers (a-i) to (a-v) shall be governed by the directions contained in the body of this
judgment.
60. Learned Counsel appearing on behalf of the Unions has submitted that an appropriate direction may be issued by the Court to (i) protect the
workmen in respect of payments which have already been made under the Part-I and Part-II Awards so that no recoveries are made pending the
proceedings on remand; and (ii)the allowances referred to in the Head Office Settlement are paid.Learned Counsel appearing on behalf of HLL
has stated on instructions that (i) Payments which have been made shall be subject to such adjustment as may be warranted upon the Award of the
Tribunal on remand and no recoveries will be made from the workmen in the meantime; and (ii) The allowances covered by the Head Office
Settlement and specified in Para 111 of the Award of the Tribunal shall continue to be paid. The statement which has-been made on behalf of HLL
will sufficiently protect the workmen until the Tribunal disposes of the proceedings upon remand.
61. Rule is made absolute to the aforesaid extent. In the facts and circumstances, parties shall bear their own costs.
