MANU/SC/0219/1967Equivalent Citation: AIR1967SC1175, [1967]2SCR463

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 634 of 1965
Decided On: 24.01.1967
Appellants:Kamani Metals & Alloys Ltd.
Vs.
Respondent:Their Workmen
Hon'ble Judges/Coram:
C.A. Vaidialingam, M. Hidayatullah and S.M. Sikri, JJ.
Case Note:
Labour and Industrial - revision in salary - Section 10 (1) of Industrial
Disputes Act, 1947 - dispute between union and company - issue pertains to
revision in wages, dearness allowance, bonus, permanency etc. - reference
before Conciliation Board which referred matter to Tribunal - Tribunal
awarded revision for wages - company appealed before Supreme Court -
company contended on following issues - firstly award made effective from
past which entails burden for company - secondly wrong principles have been
followed by comparing it with unrelated companies for revising dearness
allowance and wages - thirdly wage fixation technique adopted not justified
as it depends on factors that vary from region to region and industry to
industry - Supreme Court decided that increments made by Tribunal were not
disproportionately high and dearness allowance had been rightly computed -
revision of wages made by Tribunal justified.
JUDGMENT
M. Hidayatullah, J.
1 . This is an appeal against the Award, April 23, 1964, of the Maharashtra Industrial
Tribunal, Bombay (Mr. Meher) in reference (IT) 271 of 1962. The Award was given in a
dispute between the Kamani Employees Union, Bombay and the Kamani Metals & Alloys
Ltd. The Company is the appellant before us. The reference was occasioned by a
demand raised by the Union on February 25, 1960 in relation to wage scales and
classifications, dearness allowance, production bonus, permanency for daily-rated
workmen and grades and scales of pay, dearness allowance and abolition of marriage-
clause for monthly paid employees. At first a reference was made to a Conciliation
Board by the Government on September 8, 1962. The conciliation was frustrated for
some reasons and on December 14, 1962, the Bombay Government acting under section
10(1)(d) of the Industrial Disputes Act, 1947 referred the dispute to the Tribunal for
adjudication. By the Award now under appeal, some points were decided in favour of
the Company and some others in favour of the workmen. The workmen have not
appealed and the Company has also confined this appeal to some of the points decided
against it.
2. We are concerned with a Company which is carrying on the business of melting and
manufacturing all kinds of rolled products of non-ferrous metals and alloys, copper land
copper-based alloys, such as sheets, strips, coils etc. According to the Company the
process of manufacture, unlike the general engineering industry, involves only the

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melting of the non-ferrous metals and casting them into suitable slabs for the
subsequent processes of hot and cold rolling to alter their shape, size and metallurgical
properties. The product so wrought serves as a base raw material for making products
such as automobiles, telephones, radios and other electrical gadgets, etc. The Company
claims that it cannot be described as a general engineering industry.
3. The main contentions in this appeal concern the revision of wages and monthly pays
and the fixing of wage scales and time scales in respect thereof, respectively, and the
increase in dearness allowance by adopting a new system of calculation. The Company
also complains that the Award has been given retrospective operation entailing heavy
burden upon it. In support of the above contentions the Company states that its
financial capacity does not bear the revision either of the wages and pays on the one
hand or the dearness allowance on the other. It submits that the Tribunal in revising the
wages, pays and the dearness allowance has followed wrong principles and ignored
those laid down by this Court. Much of the argument in respect of wages to daily rated
workmen and pays to monthly-rated workmen is common and it will not be necessary to
refer to the argument twice over in the course of this judgment.
4. This is the first revision of wages and the dearness allowance in this Company during
the last 20 years. The wage scales and the dearness allowance were fixed unilaterally to
start with. The minimum basic wage was fixed at Rs. 30 per month or Rs. 1.16 per day
which was the minimum settled by the Bombay Textile Standardization Award and the
First Central Pay Commission for Government servants in or about 1950. The Tribunal
has raised the minimum wage to Rs. 1.35 per day, which is equivalent to a wage of Rs.
35 per month. The maxima have also been raised proportionately. Similarly, in the case
of monthly rated workmen the minimum monthly salary, which was Rs. 60 for the
lowest grade clerk, has been raised to Rs. 85/- and the maximum has been increased in
almost the same proportion. The Company contends that this increase is based upon
wrong principles inasmuch as the wages and pays in this company have been compared
not only with the companies operating non-ferrous metals in the same way but with
general engineering concerns and has taken an irrelevant factor, namely, the yield from
incentive bonus into consideration, has made wrong grades and unnecessary
adjustment in making fitments without taking into account the financial burden thus
involved and the capacity of the Company to bear it. We shall consider these
submissions.
5 . In dealing with these contentions we shall being by considering one contention
which, if accepted, will cut at the very root of the case for revision of wages. It has,
however, no merit. The submission is that there is no change of circumstances
justifying a revision of wages and pay scales or dearness allowance. It can hardly be
maintained that wages fixed so far back do not need revision, when, as every one
knows, commodity prices have soared high, the general level of wages has gone up and
in some industries there have been two or three revisions already and in some others
Wage Boards have been appointed to revise of fix wages. We can take judicial notice of
these facts. In this Company no revision has taken place and the demand is, therefore,
not unjustified.
6. Before we deal with the other contentions it is necessary to make a few preliminary
observations about the principles which are to be followed. In questions of this type it
is first desirable to consider what amount is necessary to maintain and even improve
the workers' standard of living, how wages of the workers concerned compare with
those paid to workers of similar grade and skill by other employers in similar or other
industries in the region and what wages the establishment or industry can afford to pay.

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There are the fundamental principles which have to be borne in mind. The first,
however, is a general inquiry into the structure of wages which it may not be necessary
to examine elaborately each time because that inquiry is generally made independently
of individual cases. The data is usually compiled by labour conferences and experts. The
other two matters, of course, require attention.
7 . Fixation of a wage-structure is always a delicate task because a balance has to be
struck between the demands of social justice which requires that the workmen should
receive their proper share of the national income which they help to produce with a
view to improving their standard of living, and the depletion which every increase in
wages makes in the profits as this tends to divert capital from industry into other
channels thought to be more profitable. The task is not rendered any the easier because
conditions vary from region to region, industry to industry and establishment to
establishment. To cope with these differences certain principles on which wages are
fixed have been stated from time to time by this Court. Broadly speaking the first
principle is that there is a minimum wage which, in any event, must be paid,
irrespective of the extent of profits, the financial condition of the establishment or the
availability of workmen on lower wages. This minimum wage is independent of the kind
of industry and applies to all alike big or small. It sets the lowest limit below which
wages cannot be allowed to sink in all humanity. The second principle is that wages
must be fair, that is to say, sufficiently high to provide a standard family with food,
shelter, clothing, medical care and education of children appropriate to the workman
but not at a rate exceeding his wage earning capacity in the class of establishment to
which he belongs. A fair wage is thus related to the earning capacity and the workload.
It must, however, be realised that 'fair wage' is not 'living wage' by which is meant a
wage which is sufficient to provide not only the essentials above-mentioned but a fair
measure of frugal comfort with an ability to provide for old age and evil days. Fair wage
lies between the minimum wage, which must be paid in any event, and the living wage,
which is the goal. As time passes and prices rise, even the fair wage fixed for the time
being tends to sag downwards and than a revision is necessary. To a certain extent the
disparity is made up by the additional payment of dearness allowance. This allowance is
given to compensate for the rise in the cost of living. But as it is not advisable to have a
100% neutralisation lest it lead to inflation, the dearness allowance is often a little less
than 100% neutralisation. In course of time even the addition of the dearness allowance
does not sufficiently make up the gap between wages and cost of living and a revision
of wages and/or dearness allowance then becomes necessary. This revision is done on
certain principles.
8. These principles have been stated in more than one case of this Court. The Company,
however, relies upon Novex Dry Cleaners v. Its Workmen [1962] 1 L.J 271. The
principles laid done in that case have been accurately summarized in the head-note thus
:
".... But in fixing a fair wage, the capacity of the industry to bear the burden of
the said wage scale is a very relevant and very important factor. Before
comparing the establishment in question with other establishments engaged in
the same trade in the region, it would be obviously necessary for the industrial
tribunal to compare the establishments in respect of their standing, the extent
of the labour force employed by them, the extent of their respective customers
and what is more important, a comparative study should be made of the profits
and losses incurred by them for some years before the date of the award. It is
well known that in fixing the wage structure on a fair basis; an attempt is
generally made in assessing the additional liability imposed on the employer by

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 the new wage structure and trying to anticipate whether the employer would be
able to meet it for a reasonably long period in future.
Where the award simply fixed the wage scales on the assumption that the
establishment in question was comparable to the other two establishments in
the same region without considering the aspects mentioned above, it must be
set aside. In the consequence, the industrial tribunal was directed to reconsider
the question of fixation of wage scales in the light of the principles mentioned
supra.
. . . . . ."
9 . The Company contends that many of the matters here stated have not been
considered and the Award being defective for that reason deserves to be set aside. This
is not a proper approach. The observations no doubt lay down the principal guide-lines
but they are not intended to operate with the rigidity of a statutory enactment. The
Court has indicated what lines of inquiry are likely to lead to the discovery of correct
data for the fixation of fair wages in the sense explained above. In this task all the
relevant considerations must enter but fruitless inquiries into matters of no particular
importance to a case are hardly to be insisted upon because rather than prove of
assistance, they might well frustrate the very object in view. Each case requires to be
considered on its own facts. In the case before us, all relevant circumstances have, in
our opinion, entered the determination, and it has not been shown to us that any other
circumstance could or should have been considered. In fact the argument was that the
tribunal considered some irrelevant things and this has vitiated the finding. We shall
now consider the specific objections.
1 0 . The Company has a capital of Rs. 40,00,000. Its sales in 1957-58 to 1961-62
increased from Rs. 1,81,18,873 to Rs. 2,31,50,485 and its profits in 1962-63 were of
the order of Rs. 28 lakhs, excluding Rs. 5 1/2 lakhs for depreciation and Rs. 2 lakhs for
managing agency commission. The burden of the increased wage bill will not be more
than 1/10th of its net profits, to say nothing of some other savings by way of reduction
of income-tax. The tribunal held that the burden could be borne and we agree. One part
of the inquiry, namely, the capacity to pay the increased wage bill was satisfied.
The next part of the inquiry involved the application of the principle of industry-cum-
region. This principle is that fixation or revision of scales of wages, pays or dearness
allowance must not be out of tune with the wages etc. prevalent in the industry or the
region. This is always desirable so that unfair competition may not result between an
establishment and another and diversity in wages in the region may not lead to
industrial unrest. In attempting to compare one unit with another care must be taken
that units differently placed or circumstanced are not considered as guides, without
making adequate allowance for the differences. The same is true when the regional level
of wages are considered and compared. In general words, comparable units may be
compared but not units which are dissimilar. While disparity in wages in industrial
concerns similarly placed leads to discontent, attempting to level up wages without
making sufficient allowances for differences, leads to hardships.
11. It is complained that the Tribunal, has done exactly the opposite, namely, that it
has compared dissimilar concerns and not compared similar ones. What the Tribunal
has done is to compare the Kamani Metals & Alloys (appellant Company) with the
Indian Smelting and Refining Co. Ltd. and the Kamani Engineering Corporation Ltd. The
appellant Company does not object to the first but to the second as it deals with non-

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ferrous metals and alloys and does not require engineering process in its manufacture.
For the same reason a comparison with Alcock Ashdown and Co. and Richardson and
Cruddas & Co. is objected to. On the other hand, it is submitted that another company
Devidayal Metals Industries Ltd., Bombay was a comparable concern.
12. Both sides agree that a comparison with the Indian Smelting and Refining Co. Ltd.
was proper. As regards Devidayal it is clear from the records that it is a much smaller
concern and does not furnish a just basis for comparison. The scales of pay existing in
it are considerably lower than the existing scales in many instances. As regards Kamani
Engineering Corporation it is necessary to consider a few facts. In 1951 a common
award was given in respect of Kamani Engineering Corporation and the Kamani Metals
and Alloys. In 1958 the demand for revision of dearness allowance was rejected by a
common award. This time too the charter of demands in respect of the Kamani
Engineering and Kamani Metals & Alloys was the same and given within a few days of
each other. These references were first pending before Mr. T. Bilgrani but as he had 551
references pending before him five references in respect of the Kamani group of
industries were with drawn from him and made over to Mr. Meher. The references were
heard together. The award in the Kamani Engineering was rendered on 27th February,
1964 and that in Kamani Metals & Alloys on 23rd April, 1964. Many of the exhibits were
common and the two awards refer to these common exhibits. In these circumstances,
the comparison was not inadmissible. The principle of fixation of wages and dearness
allowance was stated by this Court in these words :
".... The principle therefore which emerges from these two decisions is that in
applying the industry-cum-region formula for fixing wage-scales the tribunal
should lay stress on the industry part of the formula if there are a large number
of concerns in the same region carrying on the same industry; in such a case in
order that production cost may not be unequal and there may be equal
competition wages should generally be fixed on the basis of the comparable
industries, namely, industries of the same kind. But where the number of
industries of the same kind in a particular region is small, it is the region part
of the industry-cum-region formula which assumes importance......." (Greaves
Cotton & Co. v. Their Workmen MANU/SC/0169/1963 : (1964)ILLJ342SC .
13. In dealing, therefore, with only one comparable concern it was open to take into
consideration the conditions existing in engineering concerns, particularly those in
Kamani Engineering Corporation, which belongs to the same group and there is thus
affinity between them.
1 4 . We were taken through the comparative charts showing the scales of wages in
these concerns and pointed out the differences particularly those operating to the
disadvantage of the appellant Company. That some differences are bound to be there
because of many imponderables that go into the fixation of wages, goes without saying.
We are, of course, not expected to go into the matter over again in the appeal. An
appeal against an award brought by special leave is not an appeal as of right. It is not
intended to be an appeal on every ground of fact and of law unless this Court considers
it fit to examine the matter from any special angle. Before a party can claim redress, it
must show that the award is defective by reason of an excess of jurisdiction or of a
substantial error in applying the law or some settled principle or of some gross and
palpable error occasioning substantial injustice. An industrial adjudication by reason
that it is an award cannot be assailed because some other person would have given a
different award or that elaborate reasons have not been given. We have considered the
comparative charts carefully and on the whole, we are satisfied that the scales of wages

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as fixed by this Award when compared with those existing in Indian Smelting, when
they are high, are not so high as to merit special comment or interference. Sometimes
they are lower. It remains, however, to consider the case from the angle of the scales of
wages existing in Kamani Engineering Corporation.
1 5 . In dealing with the scales of pay in comparison with those existing in Kamani
Engineering Corporation the Tribunal observed that higher wages were being fixed in
the Kamani Metals & Alloys because the yield from incentive bonus in the Kamani
Engineering Corporation was between 20 to 30% of the wages and the dearness
allowance whereas in this Company it was abnormally low. Mr. Gokhale contended that
the yield from incentive bonus is an irrelevant factor to take into account and observed
that if persons could get higher wages by not earning incentive bonus, the result might
be a disincentive to work at all. Speaking generally, his objection is right to a certain
extent. But it is not right in the circumstances of this case. The Company has since 1949
introduced a scheme of wage incentive. There is no straight piece rate system under
which the worker is paid a fixed amount for each unit of out-put. There is a fixation of
average production for a whole group and not for the individual worker. The target in
the melting section is fixed at 5000 cwt. and 1.5% on every additional 300 cwt. is fixed
as bonus. Other sections have different targets and different percentages. A similar
scheme also exists in the Kamani Engineering Corporation. What has happened is that
the Tribunal in fixing scales of wages in the reference from Kamani Engineering fixed
lower rates because it was of the opinion that quite a substantial sum was earned in
that establishment by way of incentive bonus. When the Tribunal came to decide the
present reference it recalled that lower wages were fixed in the Kamani Engineering
Corporation case because of the yield from incentive bonus. It, therefore, ascertained
the yield in the Kamani Metals & Alloys and finding it low fixed the wages at the proper
level unaffected by consideration of incentive bonus. This really means that proper
wages were fixed in the Kamani Metals & Alloys without being influenced in any way by
the yield from incentive bonus although in the case of Kamani Engineering Corporation
lower wages were fixed because the yield from incentive bonus was very high. In these
circumstances, we are of the opinion that the wages in the present case have not really
been influenced by considerations of yield from incentive bonus whatever may be said
of Kamani Engineering Corporation.
1 6 . It was next contended that there is no case made out for adjustment of the
workmen in the new time scale after granting them one additional increment after every
three years' service and two additional increments after five years' service. The principle
on which a point-to-point adjustment is sometimes departed from and increments are
granted was stated in some cases of this Court. It is sufficient to refer to only one of
them. In Hindustan Times, Ltd. v. Their Workmen MANU/SC/0283/1962 :
(1963)ILL J108SC , the question of adjustment of existing employees into new scales
was considered. It was observed as follows :
"... It may well be true that in the absence of any special circumstances an
adjustment of the nature as allowed in this case by allowing special increment
in the new scale on the basis of service already rendered may not be
appropriate. Clearly, however, in the present case the tribunal took into
consideration in deciding this question of adjustment the fact that it had been
extremely cautious as regards increasing the old wage-scales. Apparently, it
thought that it would be fair to give some relief to the existing employees by
means of such increase by way of adjustment while at the same time not
burdening the employer with higher rates of wages for new incumbents. In
these circumstances, we do not see any justification for interfering with the

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 directions given by the tribunal in the matter of adjustments."
17. In this case also the fixation of scales has been very cautious. The increase from
Rs. 1.16 to Rs. 1.35 in lowest category is not very high considering that these wages
had existed for 12 years before they were so adjusted. Similarly, the starting wage in all
the other three categories cannot be considered to be very high. The same is the case
with monthly-rated workmen. The annual increment is not unduly high and in these
circumstances it cannot be said that the Tribunal was in error in departing from a point-
to-point adjustment to grant one or two increments based on the length of service. The
discretion was exercised on sound judicial lines.
1 8 . It was finally contended that the Tribunal was in error in making the Award
retrospective from October 1, 1962, when the reference was made on December 14,
1962. This objection has no force. In the charter of demands the workmen had claimed
retrospective revisions from July 1, 1961. The matter was referred to the Board of
Conciliation on September 8, 1962. When conciliation was frustrated because of the
arrest of some of the workers of the Union under the Defence of India Rules, the
present reference was made to the Tribunal. The Tribunal could have easily chosen
September 8, 1962 but chose an intermediate date to be fair to both sides. In our
judgment, the choice of October 1, 1962 by the Tribunal cannot be characterised as
either illegal or unfair. The question of incentive bonus revision was not mooted before
us and the direction that incentive bonus should be calculated on the new scale from 1st
January, 1964 is more in favour of the employers than the workmen and no grievance
can be made about it.
19. This brings us to the question of the monthly-rated workers. Most of the points
which we have discussed in relation to the daily rated workmen are common. We have
seen the scales which have been fixed and compared them with the rates obtaining in
Indian Smelting and the Kamani Engineering and other concerns and are satisfied that
they have not been put so high as to merit interference at our hands. It is, however,
contended that the Tribunal has gone beyond the Reference inasmuch as the Reference
was in respect of special categories of monthly-rated employees by designation but the
Tribunal has fixed the new scales not only for those workmen but for all clerical and
other workmen which were classified as Grades A, B, C and D in 1950. It is true that the
Tribunal had not only fixed the new scales for those categories of monthly-paid
employees who were named in the order of reference but has also provided that those
scales shall apply to clerks in the A, B, C and D Grades. It is, however, clear that even
the monthly-paid employees mentioned by name belong to one category or another in
the Grades A to D. It would have been highly invidious if some persons in the Grades
were to receive more pay than the others in the same Grade. The Award, therefore,
treats the Reference as referring to the 4 Grades although only some of the class who
go by special designations in each Grade have been mentioned. The intention, however,
was to have a general revision of the scales of payment to all workers paid monthly and
the Tribunal was, therefore, right in not reading the Reference as restricted to only a
few classes. By doing so the Tribunal has avoided further industrial unrest and disputes
and has really given effect of the underlying object of the reference.
2 0 . This brings us to the last question which is related to the dearness allowances
payable to the monthly-rated workmen. Previous to the present Award the dearness
allowance was payable in this company in the following manner :

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21. The above percentage of dearness allowance is applicable when the Bombay Cost of
Living Index rests between 311 to 320. Variation in the above percentage to be allowed
per 10 point movement in the index. First slab - 3 per cent of dearness allowance; 2nd
slab 1 1/2 per cent of dearness allowance; 3rd slab 1 per cent of dearness allowance;
4th slab 3/4 per cent of dearness allowance and the last slab 1/2 per cent of the
dearness allowance."
In the Award this has been altered to a scheme which is as follows :

NOTE : The minimum dearness allowance will be the revised textile scale.
2 2 . The above percentage of dearness allowance is applicable when the Bombay
Consumer Price Index is between 311 and 320. Variation per 10 point movement in the
index should be as follows :

23. It is contended that linking the dearness allowance, after the consumer price index
321 to wages has made a departure from the fixation of dearness allowance fixed in the
Kamani Engineering Corporation in which, under the same circumstances, the
percentage after the consumer price index of 321 is that of the dearness allowance and
not of the basic salary. On the other side, we were shown a number of awards in which
dearness allowance has been fixed in the same manner as by this Award. It appears that
the case of Kamani Engineering was treated as a special case because the incentive
bonus there was yielding a third of the total earnings of the workmen and it was
considered that if the dearness allowance was also raised then a very great burden
would be thrown upon the employer by reason of the incentive bonus. We cannot,
therefore, use the precedent of the award in the Kamani Engineering Corporation
because of these special facts. We are satisfied that in many other companies dearness
allowance has been ordered to be calculated in the same manner as has been done by
this Award and we see no reason, therefore, to interfere.

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24. For these reasons we find no force in this appeal. It fails and will be dismissed with
costs.
25. Appeal dismissed.

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