1972 INSC 0130
                                         M/S. Unichem Laboratories Ltd.

                                                           Vs

                                                    The Workmen

                                    Civil Appeal No. 1091 To 1093 Of 1971

                                (G. K. Mitter, C. A. Vaidialingam, I. D. Dua JJ)

                                                      24.02.1972

                                                     JUDGMENT

VAIDIALINGAM, J. -

1. These three appeals, by special leave, arise out of the Award, dated April 15, 1971, of the
Industrial Tribunal, Maharashtra, Bombay in Reference (I.T. Nos. 20 and 105 of 1069 and 70 of
1970).

2. The main questions that arise for consideration in these appeals relate to the award of Dearness
Allowance, Classification of Grades and Fixation of Wages and a direction given by the Industrial
Tribunal regarding the Incentive Bonus Scheme, as modified by the Company. There is also a minor
point regarding a particular clause in the Gratuity Scheme as framed by the Tribunal in Reference
(I.T. No. 20 of 1969). Though there are certain other matters dealt with in the award in Reference
(I.T. No. 20 of 1969) they are not the subject of controversy in these appeals.

3. We will now state the circumstances under which the Reference came to be made to the Tribunal.

4. The appellant was started as a proprietary concern in the year 1944 and was later transformed to a
public limited Company and registered as such under the Indian Companies Act, 1962. From its
inception, the Company has been dealing in the business of manufacturing and selling
pharmaceutical products. It had its factory in Jogeshwari in Greater Bombay. At the time of the
Reference, the Company was employing about 714 workmen, of whom 558 were operations and
156 were members of the clerical and subordinate staff. All these employees were covered by the
demands comprised in all the References. The wage-scales of the workmen had been determined
originally in Reference (I.T. No. 23 of 1959). The wage-scales of the operatives were as follows :

                  #"Unskilled A Rs. 1.52-0.09-2.23-0.12-2.93 Unskilled B Rs. 1.25-0.06-1.85-0.09-
                  2.30 Semi-skilled A Rs. 2.00-0.12-2.72-0.18-3.80 Semi-skilled B Rs. 1.76-0.11-2.64-
                  0.15-3.39 Skilled Rs. 2.59-0.13-2.85-0.22-3.95-0.30-4.25."##

5. The wage-scales of the clerical and subordinate staff were as follows :

#"Junior Chemist Rs. 120-10-200-12-260Manufacturing Assistant Rs. 140-10-220-15-310Store-
keepers }Store Assistants } Rs. 180-10-260-15-350Stenographers }Junior clerk Rs. 60-8-90-10-140
E. B. 15-215Intermediate clerks Rs. 75-8-115-12-175 E. B. 15-250Senior clerks Rs. 115-10-255-15-
315 E. B. 20-395."##
6. In addition to the basic wages, referred to above, the employees were getting dearness allowance,
which in the case of operatives was equal to 80% of the revised textile scale of dearness allowance
and in the case of clerical subordinate staff 100% of the revised textile scale of dearness allowance.

7. The nomenclature of the grades of the operatives was changed by a consent award in Reference
(I.T. No. 170 of 1961). The grades and wages as per this award were as follows :

                  #"Unskilled Rs. 1.25-0.06-1.85-0.09-2.30Semi-skilled A Rs. 1.52-0.02-2.33-0.12-
                  2.93Semi-skilled B Rs. 1.76-0.11-2.64-0.15-3.39Skilled Rs. 2.00-0.12-2.72-0.18-
                  3.39Highly Skilled Rs. 2.59-0.13-2.85-0.22-3.95-0.30-4.25."##

8. The dearness allowance of the operatives and clerical and subordinate staff underwent a change
by the award in Reference (I.T.No. 402 of 1963). Under that award the dearness allowance of the
operatives was increased to 90% of the revised textile scale of dearness allowance from January 1,
1964, and 95% of the revised textile scale of dearness allowance from July 1, 1964. The dearness
allowance of the clerical and subordinate staff was supplemented at different slabs with effect from
January 1, 1964 as follows :

#"Basic salary up to Rs. 100 Operatives' dearness allowance plus Rs. 7.50Basic salary of Rs. 101 to
200 Operatives' dearness allowance plus Rs. 15.Basic salary of Rs. 201 to 300 Operatives' dearness
allowance plus Rs. 22.50.Basic salary of over Rs. 300 Operatives' dearness allowance plus Rs.
25."##

9. Though the award prescribed to the clerical and subordinate staff the same rate of dearness
allowance of the operatives plus a fixed amount, as referred to above, the Company continued to
give them dearness allowance equal to 100% of the revised textile scale of dearness allowance. This
was also supplemented with the fixed amount depending upon the slab of the salary.

10. There was a settlement on June 24, 1966, between the Company and its employees, in and by
which the wages of the operatives and the clerical and subordinate staff underwent a final revision.
The wages of the operatives were fixed as follows :

#"Unskilled Rs. 1.25-0.10-2.75Semi-skilled B Rs. 1.60-0.12-2.32-0.15-3.67Semi-skilled A Rs. 1.80-
0.15-2.85-0.20-4.45Skilled Rs. 2.10-0.20-3.10-0.25-5.10Highly skilled Rs. 2.75-0.20-3.75-0.25-
5.00-0. 30-6.50."##

11. Similarly, the wages of the clerical and subordinate staff were as follows :

#"Junior Clerk Rs. 75-6-105-10-155-15-260 E.B. 17-311Intermediate Clerk Rs. 90-8-130-12-190-
15-295 E.B. 18-349Senior Clerk Rs. 125-10-195-15-270-20-390 E.B. 25-440Steno and Store-keeper
Rs. 180-10-260-15-380 E.B. 20-4-460."##

12. The above basic scales in respect of all the categories were again supplemented by dearness
allowance as provided for in the award passed in Reference (I.T. No. 402 of 1963). The Company
had also an Incentive Bonus Scheme, by virtue of which a large number of operatives were getting
on an average an additional sum of Rs. 28/- per month. The company further revised from about
November 1, 1969, the wage-scales of Drivers and Watchmen as follows :

#"Drivers Rs. 70-6-100-9-145-12-205 E.B. 15-250Watchmen Rs. 45-4-65-6-95 E.B. 8-135."##
13. The above was the pattern of the wage structure and dearness allowance for the operatives and
the clerical and subordinate staff.

14. The Unions concerned made a demand for introducing the following scheme of dearness
allowance in respect of all the workmen with immediate effect :

#"Wage slab When the working Variation in the dearness class cost of living allowance for every 10
index figure is in points rise or fall. the group of 401-410.Up to 100 100 per cent. 5 per cent.From
Rs.101 50 per cent. 2 1/2 per cent. to 200From Rs. 201 25 per cent. 1 1/4 per cent. and above.##

Minimum dearness allowance Rs. 100/-. Minimum variation Rs. 5."

15. They also demanded that the above scheme of dearness allowance was to have retrospective
effect from August 1, 1967. In the same demand the Unions required that the workmen should be
granted one month's wages for every year of service as gratuity in case of resignation, dismissal,
discharge, death or termination of service for any reason. By this demand the Unions required
modification of the then existing pattern of payment of dearness allowance at 95% of revised textile
scale of dearness allowance to operatives and 100% of revised textile scale of dearness allowance
plus Rs. 7.50 to Rs. 25/- paid to the clerical and other staff. The company did not agree to the
demand and in consequence by order, dated January, 14, 1969, the Government of Maharashtra
referred for adjudication to the Industrial Tribunal the demands. This Reference was registered as
Reference (I.T.No. 20 of 1969).

16. The Unions again made a demand for revision of scales of pay as well as the classification of
employees, their grades and their fitment in the revised scales of pay. As against the then existing
six categories of workmen and their wage-scales of the operatives the Unions demanded new
classification and gradation into eight grades with new wage-scales. Similarly, as against the then
existing five grades of the clerical and subordinate staff, the Unions demanded the creation of six
categories with enhanced wage-scales. These demands again were not accepted by the company
which led to the State Government making a reference on January 9, 1970, which reference was
registered as Reference (I.T. No. 70 of 1970).

17. The Company, some time in the year 1959 had introduced an Incentive Bonus Scheme. This was
introduced, according to the appellant, because of the fact that the workmen were not giving a
substantial production. The basis of the scheme, introduced by the appellant, was that if the
workmen gave only 30% of the 100% production expected of them, their performance would be
considered zero. On the other hand, if they gave production above 30% and up to 100%, they would
be eligible for payment of Incentive Bonus which would be from 31 to 100 points. In other words,
for the 70 points above the first 30 points, the workmen would get Rs. 50/- as Incentive Bonus
which would work out approximately to about Rs. 71.43 P. per point. The appellants desired that the
then existing floor limit of 30% ought to be raised to 75% without the varying the quantum of Rs.
50/- that was originally payable on achievement of 100% production. What was intended was that
the 25 points between 75 and 100 points were to be made eligible for payment of Incentive Bonus
of Rs. 2/- for each point.

18. The Company served a notice of change on the workmen under Section 9-A of the Industrial
Disputes Act, 1947. As the workmen protested against this charge, this led the Government to make
a reference to the Industrial Tribunal for adjudication. This was numbered as Reference (I.T. No.
105 of 1969).
19. The appellant resisted the claims made for revision of dearness allowance and wage-scales as
well as the modification sought for in the gratuity scheme. The appellant also wanted the Tribunal to
uphold the notice of change given by it under Section 9-A of the Industrial Disputes Act in respect
of the Incentive Bonus Scheme. In particular the appellant contended that it was not a comparable
concern with units referred to by the Unions and that any modification in the scale of dearness
allowance and wages would be beyond its financial capacity. The appellant also relied on the
coming into force of the Drugs (Price Control) Order, 1970, with effect from May 16, 1970.
According to the appellant the wages and dearness allowance paid by it to the workmen were far
higher than what were paid by other units in the region. The Company also referred to the various
awards wherein it had been held that it could not be compared with an International Company
having branches in Bombay or with foreign concern though incorporated in India. The wage-scales
had been fixed by settlement, dated June 24, 1966, and that nothing has happened since the date of
settlement to justify a revision of wage-scales and dearness allowance. The appellant further urged
before the Tribunal that the double linking of dearness allowance, as required by the Unions had
never been adopted for the pharmaceutical units in the Bombay region. According to the appellant,
the revision effected regarding the Incentive Bonus Scheme was justified and the amount of Rs. 2/-
offered per point was much more that the prevailing rate of Rs. 71.43P. per point. It also opposed
the revision of the then existing gratuity scheme as demanded by the Unions. According to the
appellant the gratuity scheme which was in force had been introduced by a consent award in 1963.

20. The appellant filed copies of balance-sheets and profit and loss accounts from 1962-63 to 1969-
70 and various other charts in support of its plea that it will not be able to bear the additional
financial burden that would result if the wage-scales and dearness allowance are revised as per the
demands made by the Unions.

21. It will be seen from the facts mentioned above that the main controversy between the parties
related to the revision of wage structure and dearness allowance. As the demands of the workmen
related to regrouping in different grades, the operatives and the clerical and subordinate staff and as
this involved a very radical change in the then existing pattern of grades, the Tribunal felt that the
opinion of an expert should be obtained on the advisability of the reclassification. In this regard both
the Unions and the appellant filed a joint application on December 22, 1970, requesting the Tribunal
to appoint Sri N. L. Gadkari, retired Chief Inspector of Factories, Maharashtra State as an assessor.
They also prayed that the points mentioned in the application be referred for the opinion of the
assessor. The assessor submitted his report on February 22, 1971, in which he recommended the
continuance of the then existing grades.

22. The Unions while demurring to the report of the assessor, requested the Tribunal by their
application, dated March 25, 1971, to fix for the then existing five grades the following wage-scales
:

#"Unskilled Rs. 85-8-125-10-225Semi-skilled B Rs. 100-10-150-12-210-15-285Semi-skilled A Rs.
120-12-180-15-255-18-345Skilled Rs. 140-15-215-18-305-20-405Highly skilled Rs. 225-25-350-30-
500-35-675."##

23. The appellant, when the reference came up for hearing, raised an objection to the selection of
wage-scales by the Unions for the existing grades of the operative on the ground that a selection was
not permissible, being contrary to the provisions of Section 10(4) of the Industrial Disputes Act.
The Unions, ultimately, made it clear to the Tribunal that their demanded for revision of wage-
scales of the existing five grades of operative is to be as follows :
#"Unskilled Rs. 60-5-85-7-155Semi-skilled B Rs. 70-6-100-8-180Semi-skilled A Rs. 85-6-125-10-
225Skilled Rs. 100-10-150-12-210-15-285Highly skilled Rs. 120-12-180-15-255-18-345."##

24. It is on the basis of this claim that the question of revision has been dealt with by the Tribunal.

25. Regarding the financial incapacity pleaded by the appellant, the Tribunal after an analysis of the
balance-sheets and profit and loss accounts, held that the average net profit of the Company during
the years 1965-66 to 1969-70 works out to about Rs. 13,84,691/-. It is also of he view that the
apprehensions of the appellant regarding the possible impact of the Drugs (Price Control) Order,
1970, are not justified. It is the view of the Tribunal that the inspite of the price freeze effected in
1963, the appellant has been doing very good business from 1962-63 to 1969-70. Ultimately, the
Tribunal found that the financial condition of the appellant is quite sound.

26. Regarding the comparable concerns in the region, the Unions referred to as many as twenty
units. One of the units relied on as comparable with the appellant was M/s. Burroughs Wellcome
and Co. (India) Private Ltd., Bombay.

27. The appellant opposed its being compared with the concerns relied on by the Unions on the
ground that those units were either foreign concerns during business in India or Indian units
working in collaboration with foreign concerns. The appellant in turn relied on several other
concerns as being comparable with it. The appellant very strongly relied on certain previous awards
in support of its contention that it has been held in those awards that the appellant cannot be
compared with foreign concerns or with concerns working in collaboration with foreign concerns.

28. The Tribunal, after a consideration of the materials placed before it, in this regard, ultimately,
held that M/s. Burroughs Wellcome and Co. (India) Private Ltd., was a unit which could be not
considered as a comparable concern with appellant. The Tribunal having regard to the grades and
scales of pay obtaining in M/s. Burroughs Wellcome and Co. (India) Private Ltd., held that the
wage-scales for the five grades for the operatives of the appellant should be as follows :

#Unskilled Rs. 42-3-71-4-112Semi-skilled B Rs. 47-3-50-82-122Semi-skilled A Rs. 50-4-90-5.50-
134Skilled Rs. 55-5.50-110-6.50-155.50Highly Skilled Rs. 72-7-142-8-182-9.50-220."##

29. The Tribunal fixed the following grades and scales of pay for the clerical and subordinate staff :

#"Junior Clerks and Rs. 85-7.50-145-10-195-12-259-17-323Laboratory AssistantsIntermediate
Clerks Rs. 120-10-200-12.260-15-335-18-353Senior Clerks Rs. 185-15-305-20-365-25-465."##

30. The Tribunal did not accept the large demand made by the Unions for a General adjustment in
increments of the employees. Nevertheless, in view of the revision of the scales of wages, it gave
certain directions so that the employees may be fitted in the appropriate revised wage-scales.

31. The parties very hotly contested the question of dearness allowances well as the pattern to be
adopted. As there were different system of dearnes allowance for the operatives and the clerical and
subordinate staff, the Union desired that a common scheme of dearness allowance on a slab system
should be adopted. The Tribunal having regard to the decision of this Court in Greaves Cotton and
Co. and Other v. Their Workmen, (AIR 1964 SC 689 SC : (1964) 5 SCR 362 : (1964) 1 Lab LJ 342)
and Bengal Chemical and Pharmaceutical Works Ltd. v. Its Workmen, ((1969) 2 SCR 113 : (1969) 1
Lab LJ 751 : AIR 1969 SC 360) held that there was no justification for having two systems of
dearness allowance - one for the operatives and the other for the members of the clerical and
subordinate staff. Accordingly, the Tribunal held that all the employees should get the same
dearness allowance irrespective of the fact whether they were operatives or members of the clerical
and subordinate staff.

32. As the dearness allowance has to be fixed on industry-cum-region basis, the Tribunal examined
the system of dearness allowance followed in the region by the industries belonging to the
pharmaceutical units. The Unions had submitted statements Exs. DU-1 and MU-1 containing a list
of pharmaceutical units, in support of their contention that such units were adopting a slab system of
dearness allowance. The Company, on the other hand, referred to certain awards of the Industrial
Tribunals in support of its stand that slab system of dearness allowance is not considered as an
appropriate mode of providing neutralisation. The Unions also relied on certain awards where in the
slab system of dearness allowance had been introduced by the Industrial Tribunals. Though the
Tribunal had held that most of the units referred to in Exs. DU-1 and MU-1, cannot be considered
for the purpose of being treated as units comparable with the appellant, nevertheless it held that the
practice adopted by those units regarding the grant dearness allowance can be taken into account as
providing a guide regarding the system of dearness allowance adopted in the region. On this basis
the Tribunal accepted the statements in Exs. DU-1 and MU-1 and held that the slab system of
dearness allowance was prevalent in a large number of units belonging to pharmaceutical industry.
In this view, the tribunal further held that slab system of dearness allowance can be adopted, if the
financial burden consequent on the adoption of the said system, can be safely borne by the
Company.

33. The Tribunal then proceed to consider the system obtaining in Burroughs Wellcome Company
regarding the payment of dearness allowance. The System in the said Company, which was common
for operatives as well as the clerical and subordinate staff, was as follows :

#Basic Salary Dearness allowance per month Variation for at the Bombay working class 10 points
costs of living index 491-500Rs. 1-100 150 per cent 5 per cent.Rs. 101-200 150 per cent. on the 1st
Rs. 100 2 1/2 per cent., 7 1/2 per cent. on the balanceRs. 201-300 150 per cent. on the 1st Rs. 100 1
1/4 per cent. 72 1/2 per cent. on the 2nd Rs. 100, and 36 1/4 per cent. on the balanceMinimum Rs.
4Dearness allowanceRs. 101##

34. In the said Company the above scale of dearness allowance was however limited only to
employees drawing a basic salary up to Rs. 300/- per month. The appellant accepted before the
Tribunal that the scheme of dearness allowance obtaining in Burroughs Wellcome Company would
cast a lesser financial burden than the scale of dearness allowance as demanded by the Unions. In
fact, the Company had filed two charts Exs. C-2 and C-13, showing the burden which it will have to
bear if the scheme of dearness allowance as determined by the Unions was introduced. The
Company had worked out the demands in different ways and that is why it filed two statements.
According to the appellant the additional financial burden will be about Rs. 8,78,125.00 as per Ex.
C-12 and Rs. 12,52,693.00 as per Ex. C-13. The Tribunal is of the view that under Ex. C-13, the
Company had taken into account a sum of Rs. 1,86,293.00 payable to some members of the staff
drawing a salary of over Rs. 200/- per month and amongst whom were also included 52 chemists.
According to the Tribunal the 52 chemists are not covered by the Reference and therefore the
burden will have to be calculated only in respect of the workmen covered by the Reference and to
whom dearness allowance is being fixed. On calculation the Tribunal found that about a lakh of
rupees payable to 52 chemists and included in Exs. C-13 by the appellant will have to be deducted
from Rs. 12,52,693.00. Accordingly, it held that as per the calculation of the appellant under Ex. C-
13, laying out the 52 chemists, the total burden will only be Rs. 11,52,693.00. Taking into account
the tax relief that the Company will get, the Tribunal ultimately held that the additional financial
burden that the appellant will have to bear will be only be Rs. 5,55,000.00. As it had already held
that the average annual gross points of the Company are over Rs. 40,00,000.00, the Tribunal held
that the Company can easily bear this additional burden. The Tribunal is further of the view that
though the financial impact of the Drugs (Price Control) Order, on the business activities of he
Company has had to be seen, the impact will not be such as to make the appellant's financial
position difficult. For all these reasons, the Tribunal fixed for the operatives and the clerical and
subordinate staff of the appellant dearness allowance on a system prevalent in Burroughs Wellcome
Company. The system of dearness allowance fixed by the Tribunal is as follows :

#Basic Salary Dearness allowance per month Variation at the Bombay working class cost of living
index 521-530Rs. 1-100 150 per cent., 5 per cent.,Rs. 101-200 150 per cent on the 1st Rs. 100 2 1/2
per cent. 72 1/2 per cent on the balanceRs. 201-300 150 per cent. on the 1st Rs. 100 1 1/4 per cent.
Rs. 72 1/2 per cent. on the 2nd Rs. 100 36 1/2 per cent. on the balanceMinimum dearness Rs.
4.allowance Rs. 101##

35. The Tribunal had further directed that dearness allowance in accordance with the above scheme
will be payable only to employees drawing a basic salary up to Rs. 300/- per month.

36. It will be seen that the Tribunal while adopting the scale of dearness allowance obtaining in
Burroughs Wellcome Company, has made a departure in fixing the scale of dearness allowance on
the basis of the Bombay Working Class Cost of Living Index 521 to 530. The dearness allowance
scheme obtaining in Burroughs Wellcome Company was on the Bombay Working Class Cost of
Living Index 491 to 500. The different cost of living index was adopted by the Tribunal in view of
the fact that the appellant was paying incentive wages to its operatives and with a view to view to
lessen the financial burden on the Company.

37. Another feature of the scheme adopted by the Tribunal is that it puts a ceiling on the employees
drawing basic wages up to Rs. 300/- per month alone being eligible for dearness allowance; whereas
under the practice originally obtaining in the Company there was no such limit. The Tribunal held
that revised wage-scales and dearness allowance would be effective from October 1, 1969 and
directed the Company to pay the arrears within three months from the date of the Award becoming
enforceable. At this stage it may be mentioned that the appellant is not challenging this direction
regarding the date from which the wage-scales and dearness allowance are to take effect, though it
very vehemently attacks the fixation of the scale of revised wage-scales and dearness allowance by
the Tribunal.

38. Regarding gratuity, the Company had already a scheme which had been introduced under the
Settlement Award in Reference (I.T. No. 141 of 1962). It is not necessary to set out the scheme that
was prevalent in the Company because the only objection of the appellant to the revised scheme
evolved by the Tribunal is in respect of raising the ceiling from 15 months to 17 1/2 months. The
demand in this regard by the Unions was that the ceiling should be raised from 15 months basic
wages to 20 months basic wages. However, the Tribunal did not accept the claim of the Unions in
toto. On the other hand, it adopted the practice obtaining in the Burroughs Wellcome Company and
accordingly fixed at 17 1/2 months basic wages.

39. Regarding the notice of the change issued to the workmen by the appellant under Section 9-A of
the Industrial Disputes Act Proposing to alter the existing floor limit of 30 per cent. to 75 per cent.
in the Incentive Bonus Scheme, the Tribunal on the joint application of the parties, dated April 10,
1970, appointed on April 28, 1970, Sri B. Tulpule, as Assessor to examine the question of revising
the existing scheme of Incentive Bonus. The Assessor submitted his report on August 27, 1970,
making the following recommendations :

                  "(1) The base performance index for all sections/in the Company's factory should be
                  revised and raised to 60 per cent.

                  (2) Consequent upon the revision of the base index as above, an amount of Rs, 1.00
                  per day should be added to the basic wages of the workers, this addition being
                  independent of any other revision of the wage structure that the Tribunal may decide
                  upon.

                  (3) The revised rates of incentive should continue beyond 100 per cent.
                  performance."

40. Though the Unions generally accepted the recommendations, the appellant was opposed,
particularly to the second and third recommendations. The Tribunal, after a consideration of the
objection, is of the view that recommendations Nos. 2 and 3 were beyond the scope of the terms of
reference made to him. Therefore, these two recommendations were negatived. Regarding the first
recommendation, it is stated by the Tribunal that the Unions accepted the same and that the
Company also was not opposed to that suggestion made by the Assessor regarding the raising of he
base performance index to 60 per cent. In dealing with this aspect the Assessor in his report had
stated as follows :

                  "If the base index of any incentive scheme is raised from X to Y, the workers will
                  stop getting the incentive earnings which they used to get for the performance range
                  from X to Y. This is also the main anxiety expressed by both the Unions in the
                  present case. At the outset I asked the management whether the implication of their
                  proposed change was such a reduction in the workers' total pay packet, at any given
                  level of performance. The management categorically assured me that is not their
                  intention. Their purpose in proposing the change is stated by them to induce workers
                  to raise their performance above the prevailing level."

41. The Tribunal in its Award has stated that the matters mentioned in the above paragraph
including the assurance stated to have been given by the appellant were not denied. Therefore, the
Tribunal, in view of the common measure of agreement between both the parties regarding the first
recommendation is of the view that if the pay packet of he workmen is to be protected at the wage
raise base index performance of 60 per cent. some scheme may have to be worked out. But as the
necessary materials for the purpose of evolving a scheme were not available, the Tribunal has
thrown out a suggestion that the said question should be dealt with by the appellant in consultation
with the Unions and frame a scheme by common consent, if possible. Accordingly, the Tribunal left
the matter to the parties to deal with the matter with the observation that if it is found that no
scheme could be framed by consent, the Unions will be free to raise any dispute that may be
available to them in that regard.

42. We have exhaustively referred to the questions referred to the Tribunal as well as the decision of
the Tribunal on those points. In these appeals, as mentioned earlier, the controversy relates to : (1)
Scale of Dearness Allowance; (2) Fixation of Wage Scales, Classification and Grades; (3) Raising of
the ceiling to 17 1/2 months basic wages in the gratuity scheme; and (4) the direction given by the
Tribunal regarding the Incentive Bonus Scheme.

43. As the main points great controversy between the parties before us relate to the pattern of
dearness allowance and the classification and grades of employees and the fixation of the revised
wage-scales, we will take up for consideration those matters.

44. The very first objection of Mr. Tarkunde, learned counsel for the appellant is regarding the
manner of ascertaining gross profits when revising the wage-scales dearness allowance. We have
already pointed out that the Tribunal has proceeded on the basis that the average annual gross profits
of the Company are over Rs. 40,00,000.00. The appellant had submitted balance-sheets and profit
and loss accounts for the years 1962-63 to 1969-70. It is enough to refer to the particulars that could
be gathered for the five preceding years, namely, 1965-66 to 1969-70. For those years the figures
are as follows :

#"Particulars 1965-66 1966-67 1967-68 1968-69 1969-70Paid-up 45,00,000 45,00,000 45,00,000
54,00,000 54,00,000capitalReserves and 21,52,186 29,25,376 44,21,515 47,15,697
57,14,988SurplusSales 2,19,97,640 2,38,66,647 3,03,59,380 3,29,94,456 3,71,52,031Depreciation
5,44,919 5,55,035 7,84,824 11,11,775 9,16,719Development 97,242 68,266 1,05,840 1,10,858
1,44,511rebateProvision for 19,15,000 15,90,300 18,50,500 16,98,500 16,39,000taxationNet Block
46,01,566 49,05,509 54,58,212 57,45,997 73,75,386Net Profit 9,54,591 14,43,489 15,97,094
16,04,501 13,28,779"##

45. From the above statement it will be seen that the average net profits work out to Rs.
13,84,691.00. The net profits have been arrived at, by the Company after deducting taxation,
depreciation and development rebate. It is on the basis of the net profits so arrived at that the
appellant appears to have urged before the Tribunal that the wage-scales and dearness allowance are
to be fixed. The Tribunal rejected this contention. On the other hand, the Tribunal has held that
when considering a revision of wage structure what is to be taken into account is not the net profits
without any deductions having been made for taxation, depreciation and development rebate. It is on
that basis that the Tribunal held that the average gross profits of the Company exceed Rs.
40,00,000.00.

46. The gross-profits without deducting taxation, depreciation and development rebate for the years
1965-66 to 1969-70 will be approximately as follows :

#Years Gross profits"1965-66 Rs. 35,11,752 1966-67 Rs. 36,57,090 1967-68 Rs. 43,37,698 1968-69
Rs. 45,25,134 1969-70 Rs. 40,24,009"##

47. From the above it will be seen that the figure of Rs. 40,00,000.00 arrived at by the Tribunal as
average annual gross profits appears to be prima facie correct.

48. Mr. Tarkunde, learned counsel for the appellant found considerable difficulty in challenging the
view of the Tribunal that gross profits are to be arrived at without deducting taxation and
development rebate. He rather strenuously urged that there is absolutely no warrant for arriving at
gross profits without deducting depreciation.

49. On the other hand, Mr. K. T. Sule, learned counsel for the respondent No. 1, whose contentions
have been adopted by Mrs. Urmila Kapoor, learned counsel for the second respondent, pointed out
that the approach made by the Tribunal is correct and is also supported by the decisions of this
Court.
50. Mr. Tarkunde referred us to Sections 205 and 211 of the Companies Act, 1956, as well as Part I,
Schedule VI, therein. We do not think it necessary to refer to those provisions as, in our opinion,
they have no relevance or hearing when considering a revision of wages and award of dearness
allowance under the industrial adjudication. Those provisions are intended for a totally different
purpose.

51. We will presently show, by reference to the decisions of this Court that the Tribunal was
justified in computing gross profits without deducting taxation, depreciation and development
rebate. In view of the decisions, to which we will immediately refer Mr. Tarkunde was prepared to
accept the position that, at any rate taxation and development rebate cannot be deducted, but he still
maintained that depreciation has to be deducted.

52. In Gramophone Company Ltd. v. Its Workmen, (1964) 2 LLJ 131 : (1964) 9 FLR 10) this Court,
in dealing with a gratuity scheme, had to consider the principles applicable for ascertaining the
financial capacity of an employer. In that decision the employer contended that before the real profit
for each year can be arrived at, the provisions made for taxation and for development reserves
should be deducted. On this basis, it was further contended that if these deductions are made, there
will not be any profit left will enable the Company concerned to frame a gratuity scheme. This
claim for deducting taxation and development rebate reserves was negatived by this Court as
follows :

                  "When an industrial tribunal is considering the question of wage structure and
                  gratuity which in our opinion stands more or less on the same footing as wage
                  structure, it has to look at the profits made without considering provision for taxation
                  in the share of income-tax and for reserves. The provision for income-tax and for
                  reserves must in our opinion take second place as compared to provision for wage
                  structure and gratuity, which stands on the same footing as provident fund which is
                  also retrial benefit."

53. It was further observed that if an industry is in a stable condition and the burden of provident
fund gratuity does not result in loss to the employer, that burden will have to be borne by the
employer, like the burden of wage structure in the interest of social justice. It was finally held that
the contention on behalf of the Company therein that provision for taxation and provision for
reserves should take precedence over provision for gratuity cannot be accepted.

54. From the above decision it is clear that : (1) Fixation of wage structure stands more or less on
the same footing as framing of a gratuity scheme and the principles applicable for ascertaining the
profits are the same; (2) provision for taxation and provision for reserves cannot take precedence
over provision for gratuity and fixation of wages; and (3) the provision for income-tax and for
reserves must take second place as compared to provision for wage structure and gratuity.

55. The above decision categorically rules out any deduction of taxation. It also excludes the from
deduction all provision for reserves which will be take in depreciation reserve also.

56. But, Mr. Tarkunde contended that the above decisions is an authority for the provision that the
only two items that could be deducted are provision for taxation and provision for development
rebate reserve. If so, the counsel urges that the deduction of depreciation reserve as claimed by the
appellant is justified and that the Tribunal erred in declining that the item to be deducted.
57. We are not inclined to accept this contention of Mr. Tarkunde. The above decision is, in our
opinion, an authority for the proposition that the provision for taxation and provision for reserves,
which expression will take in depreciation reserve also, cannot be deducted for the purpose of
computing the profits. At any rate the said decision had no occasion to consider whether
depreciation reserve can be deducted or not. We have already pointed out that the only claim made
by the appellant therein was for deducting provision for taxation and for development rebate reserve
and that claim was rejected. Therefore, looked at from any point of view, the above decision is
certainly not only in favour of the contention of Mr. Tarkunde that depreciation reserve has to be
deducted before arriving at profits.

58. In The Indian Link Chain Manufacturers Ltd. v. Their Workmen, ((1971) 2 SCC 759). This
Court had occasion to consider the principles applicable to ascertain the financial capacity of a
company in fixing wage-scales and dearness allowance and framing of a gratuity scheme. The
principle applicable was stated as follows :

                  "It is pertinent to notice that gratuity and wages in industrial adjudication are placed
                  on the same footing and have priority over income-tax and other reserves, as such in
                  considering the financial soundness of an undertaking for the purposes of
                  introduction of a gratuity scheme the profits that must be taken into account are those
                  computed prior to the deduction of depreciation and other reserves."

59. The decision in Gramophone Company Ltd. v. Its Workmen (supra), was quoted with approval
in this decision. The Company in that case had calculated profits after deducting depreciation. This
method was depreciated by this Court as follows :

                  "All these profits it may be mentioned are computed after deducting depreciation and
                  this should be taken into account in consideration the desirability of formulating a
                  gratuity scheme for the Appellant."

60. In the end the provision made for depreciation and which had been deducted by the Company
for calculation of profits was added back.

61. From the above decision it is clear that profits are not be computed prior to the deduction of
depreciation and other reserves. The said decision directly holds that provision for depreciation and
other reserves cannot be deducted in computing profits to be ascertained for framing a gratuity
scheme. This decision again reiterates the legal position that the gratuity and wages in industrial
adjudication are placed on the same footing and have priority over income-tax and other reserves. In
fact, as pointed out by us earlier, provision made for depreciation and which had been deducted by
the Company for arriving at profits was added back by this Court.

62. Mr. Tarkunde urged that this Court in The Indian Link Chain Manufacturers Ltd. v. Their
Workmen (supra), has misunderstood and misinterpreted the earlier decision in Gramophone
Company Ltd. v. Its Workmen (supra). According to the counsel the error committed by this Court
was on proceeding on the basis that the decision in Gramophone Company Ltd. v. Its Workmen
(supra) has laid down that depreciation reserve should not be deducted in computing the profits
available for framing a gratuity scheme or when fixing a wage-scale.

63. We have no hesitation in rejecting this contention of Mr. Tarkunde. We have already expressed
our views regarding the scope of the decision in Gramophone Company Ltd. v. Its Workmen (supra)
and no error has been committed by this Court in The Indian Link Chain Manufacturers Ltd. v.
Their Workmen (supra). On the other hand, the later decision is directly in point to the effect that
provision for depreciation cannot be deducted.

64. We may also refer to the observations of this Court in Ahmedabad Millowners' Association, Etc.
v. The Textile Labour Association, ((1966) 1 SCR 382 : AIR 1966 SC 497 : (1966) 1 Lab LJ 1) that
"......it is the figure of gross profits which is more important, because it is not disputed that wages
payable to the employees are a first charge, and all other liabilities take their place after the wages."

65. Mr. Tarkunde referred us to the statements contained in certain leading text books on principles
of Accounting, Book-keeping and Accounts and Accountancy regarding the nature of depreciation
reserve. In "Principles of Auditing by F. R. M. De Paula, 8th Edition", it is stated that the main
object of providing for depreciation of wasting assets is to keep the original capital intact. In
balance-sheets, how to read and understand them, by Philip Tovey, 3rd Edition" the distinction
between a "Reserve" and "Depreciation" has been stated. The author says that depreciation should
be written off before arriving at the year's profit and that reserve is built up by setting aside portions
of the profits itself. The author proceeds to state that depreciation represents the estimated wear and
tear which will ultimately reduce the property and plant to scrap value. In "Book-keeping and
Accounts" by Cropper, Morr's and Pison, 19th Edition, when dealing with the Trial Balance,
Trading and Profit and Loss Accounts, it is mentioned that depreciation is the term employed by the
Accountants to indicate the gradual deterioration both in the value and the usefulness of those assets
which by reason of their nature and uses, steadily decline in value.

66. Again in "Accountancy" by William Pickles, 3rd Edition, the author has defined "Depreciation"
as the permanent and continuing diminution in the quality, quantity or value of an asset. It is further
stated that the provision for depreciation does not depend upon what the business can afford, as the
debit therefor is an essential one, constituting not an appropriation of, but a charge against, profits
for the period in question.

67. Based upon the above statements contained in the text books, referred to above, Mr. Tarkunde
urged that the principle in Accountancy is that depreciation must be deducted before ascertaining
the profits.

68. In our opinion, the above statements may have considerable bearing in the preparation of profit
and loss accounts having due regard to the provisions of the Companies Act and Mercantile usage;
but they have no bearing on the question of fixation of wage structure and dearness allowance in an
industrial adjudication.

69. From what is stated above, it follows that the Tribunal was justified in arriving at gross profits
without deducting the provision for depreciation. As already mentioned by us, Mr. Tarkunde has
accepted that the Tribunal was justified in not deducting the provision made for taxation and
development rebate. The result is that the average gross profits of the appellant being about Rs.
40,00,000.00, as held by the Tribunal, is correct.

70. In the fixation of wages and dearness allowances the legal position is well established that it has
to be done on an industry-cum-region basis having due regard to the financial capacity of the unit
under consideration, vide Express Newspapers (Private) Ltd. and Another v. The Union of India and
Others, (1959 SCR 12 : AIR 1958 SC 578 : (1961) 1 Lab LJ 339) Greaves Cotton and Co. and
Others v. Their Workmen (supra) and Bengal Chemical & Pharmaceutical Works Ltd. v. Its
Workmen (supra).

71. It has been further stated in Graves Cotton and Co. and Others v. Their Workmen (supra) as
follows :

                  "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 a
                  small it is the region part of the industry-cum-region formula which assumes
                  importance....."

72. It has been further emphasised in Ahmedabad Millowners' Association etc. v. The Textile
Labour Association (supra) that industrial adjudication should always take into account, when
revising the wage structure and granting dearness allowance, the problem of the additional burden to
be imposed on the employer and ascertain whether the employer can reasonably be called upon to
bear such burden. The principles to be borne in mind have been stated in the said decision as
follows :

                  "It is a long-range plan; and so, in dealing with this problem, the financial position of
                  the employer must be carefully examined. What has been the progress of the industry
                  in question; what are the prospects of the industry in future; has the industry been
                  making profits; and if yes, what is the extent profits; what is the nature of demand
                  which the industry expects to secure; what would be the extent of the burden and its
                  gradual increase which the employer may have to face ? These and similar other
                  considerations have to be carefully weighed before a proper wage structure can be
                  reasonably constructed by the industrial adjudication..."

73. As pointed out in Greaves Cotton and & Co. and Others v. Their Workmen (supra), one of the
principles to be adopted in fixing wages and dearness allowance is that the Tribunal should take into
account the wage-scale and dearness allowance prevailing in comparable concerns carrying on the
same industry in the region. The factors which have to be taken into account for ascertaining
comparable concerns have also been laid down by this Court.

74. In the Workmen of Balmer Lawarie and Co. v. Balmer Lawarie and Co., ((1964) 5 SCR 344 :
AIR 1964 SC 728 : (1964) 1 Lab LJ 360) those principles have been stated as follows :

                  "Besides, it is necessary to emphasise that in dealing with the comparable character
                  of industrial undertakings, industrial adjudication does not usually rely or oral
                  evidence alone. This question is considered in the light of material facts and
                  circumstances which are generally proved by documentary evidence. What is the
                  total capital invested by the concern, what is the extent of its business, what the order
                  of the profits made by the concern, what are the dividends paid, how many
                  employees are employed by the concern, what is its standing in the industry to which
                  it belongs, these and other matters have to be examined by industrial adjudication in
                  determining the question as to whether one concern is comparable with another in the
                  matter of fixing wages. Now, it is obvious that those question cannot be decided
                  merely on the interested testimony either of the workmen, or of the employer and his
                  witness."

75. In workmen of New Egerton Woollen Mills v. New Egerton Woollen Mills and others, ((1969) 2
LLJ 782) the above principles have again been reiterated.

76. From the decisions, referred to above, it follows that two principal factors which must weigh
while fixing revising wage-scales and grades are : (1) how the wages prevailing in the establishment
in question compare with those given to the workmen of similar grade and scale by similar
establishments in the same industry or in their absence in similar establishments in other industries
in the region; and (2) what wage-scales the establishment in question can pay without any undue
strain on its financial resources. The same principles substantially apply when fixing or revising the
dearness allowance.

77. The question is whether the Tribunal has adopted the above principles when revising the wage-
scales and dearness allowance in the case of the appellant.

78. The Unions had relied on as many as twenty-one concerns located in the region of Greater
Bombay and belonging to the same pharmaceutical units of industry as units comparable with the
appellant.

79. The appellant opposed its being with those concerns on the ground that the units relied on by the
unions were companies having foreign collaborations or connections, and as such possessing several
advantages. The appellant in turn relied on several concerns in the region as comparable units.

80. Before we refer to the concerns relied on by the unions and the appellant as comparable
concerns, it is necessary to deal with an objection raised by Mr. Tarkunde that no foreign unit doing
business in India or no unit in India business in collaboration with a foreign concern, though doing
the same kind of business, can ever be considered for purposes of comparison. According to the
appellant such concerns have distinct advantages of international research facilities, reputation in
business which enables such concerns to market their products more easily and thus enable them to
pay higher wages to their employees. In view of the special technical facilities, that may be
available to them, their output will be far higher though the number of employees will be much less,
and as such they will be able to pay to their lesser number of employees higher wages. In this
connection Mr. Tarkunde relied on certain awards of the Industrial Tribunal wherein it is held that
the companies having foreign collaboration though in the same region and in the same industry,
cannot be considered for the purpose of comparison with purely local units.

81. On the other hand Mr. Sule, has opposed the above position and urged that the question as to
who is the employer, is absolutely immaterial so long as the tests for the purposes of comparability,
as laid down by this Court are satisfied and the capacity to bear the financial burden is established.
We will deal with these aspects in the first instance.

82. It must be stated at the outset that the unions placed reliance on certain information contained in
the prospectus of the company and certain statements contained in the book "Indian Pharmaceutical
Industry" published in 1963 and 1969, to show that the appellant concern is also one which has
foreign collaboration and as such it is to be ranked as a concern with foreign attachment. However,
the Tribunal, after a consideration of the said materials, has recorded a finding in favour of the
appellant that it is not a unit having foreign collaboration. Therefore, this finding is in favour of the
appellant.

83. The question that now arises for consideration is whether in law there is any objection or
prohibition in an Industrial Tribunal, when dealing with comparable units in a region from taking
into account concerns having foreign collaboration. It is no doubt true that some of the concerns
relied on by the Unions are concerns working in collaboration with foreign firms.

84. In Chemical Industries and Pharmaceutical Laboratories Limited (Cipla), Bombay v. Their
Workmen, (1957 ICR Bom 1206) it was held by the Industrial Tribunal that the Cipla cannot be
compared to Glaxo Laboratories, Raptakos Brett and other pharmaceutical concerns which are either
subsidiaries of foreign concerns or are closely linked with them. It was further held that if any
comparison could be made, it can only be with concerns like Kemp and Company, Zandu
Pharmaceutical, Fair Deal Corporation, Edison Continental Laboratories, Bengal Chemicals and
such other indigenous concerns.

85. Again in Alembic Chemical Works Ltd., Baroda v. Its Workmen, (1958 ICR Bom 1305) the
Tribunal held that Alembic cannot be compared to concerns like the Glaxo Laboratories and others
who have associations in different degrees and forms with certain foreign concerns of international
repute.

86. On this reasoning the Tribunal relied more on the scales of wages prevailing in concerns like the
Zandu Pharmaceutical, Cipla, Kemp and Co., and such similar concerns although it held that
Alembic is a much bigger concern than the said units. It must be stated that in both these awards
concerns with foreign collaboration have been eliminated from consideration on the ground that
they cannot be regarded as comparable concerns and to that extent they support Mr. Tarkunde's
contention.

87. In Reference (I.T.) No. 223 of 1959, which related to the appellant company, the workmen
placed reliance on Indian units of foreign concerns for being treated as comparable units. The
appellant, however, pointed out that those units which have international fame and repute in world
market were in a position to sell their products more easily and profitably and hence they cannot be
treated as comparable units. The Tribunal, no doubt, accepted the contention of the appellant that
the unions had selected some of the bigger concerns for comparison and held that it would be more
appropriate if the appellant is placed somewhere in between the bigger and smaller concerns. In this
view the Tribunal took a fair cross-section of the industry and fixed the wages having regard to the
financial capacity of the appellant.

88. Again in Reference (I.T.) No. 402 of 1963, relating to the appellant wherein the dearness
allowance was revised, the appellant had contended that it should not be compared with the units
like Ciba, Dumex, Glaxo, Sandoz and the like. The Tribunal held that the appellant cannot be
compared with international pharmaceutical units having branches in Bombay or with foreign
concerns like Glaxo, Ciba, Sandoz, etc., which though incorporated in India are subsidiaries of
foreign companies having all the advantages of connection with respect of home companies in
Europe and America. The Tribunal referred to the award in Reference (I.T.) No. 223 of 1959 and
held that a fair cross-section of the industry has to be taken into account for fixing a scale of
dearness allowance, which will be within the financial capacity of the appellant. But, however, the
Tribunal held that the appellant is a firm of good repute and standing and that it has very fair
prospects. Though in Reference (I.T.) No. 223 of 1959, the Tribunal did not specifically eliminate
from consideration units having foreign collaboration as such, nevertheless in Reference (I.T.) No.
402 of 1963, the Tribunal has held that the appellant cannot be compared with international
pharmaceutical companies having branches in Bombay or with concerns though incorporated in
India, are subsidiaries of foreign companies.

89. From what is stated above, it is no doubt true that in the three awards, one of which specifically
relates to the appellant, concerns having foreign collaboration have been eliminated for purpose of
comparison. But no legal principle on the basis of which such a decision has been arrived at has
been stated in any of these awards. In our opinion, so long and to the extent that concerns having
foreign collaboration are doing business in India and in a particular concerned region, we do not see
any reason why they should not be taken into account for purposes of being treated as comparable
units, provided the tests for such purposes as laid down by this Court are satisfied. No doubt some
of those concerns may be having an advantage in various matters. But merely because that they
possess such advantage in the field of business is not a circumstance for eliminating such concerns
for purposes of comparability. The object of industrial adjudication is, as far as possible, to secure
uniformity of service conditions amongst the industrial units in the same region. If a concern having
foreign collaboration properly satisfies the tests of comparability, it would be improper to regard
such unit as uncomparable merely on the ground that it is a concern with foreign collaboration or
interest and that the unit with which it is sought to be compared is entirely of Indian origin and
resources.

90. The object of Industrial Law is to improve the service conditions of industrial labour so as to
provide for them the ordinary amenities of life with a view to bring about industrial peace which
would in turn accelerate productivity of the country resulting in its prosperity. The prosperity of the
country, in its turn will help to improve the condition of labour. The principles regarding fixation of
wage-scales and dearness allowance have been laid down in several decisions by this Court and they
apply equally to all industries irrespective of the character of the employer. The worker is interested
in his pay packet and given reasonable wages, he can be expected to be a satisfied worker. There is
no justification from the standpoint of view of the employees for fixing different wage-scales
merely because of the fact that some workmen are in the employ of purely local concerns while
some others are in the employ of units though in the same region, working in collaboration with
foreign concerns. As the paramount consideration is the interest of the worker, the character of the
employer is irrelevant, provided the latter's financial capacity to bear the burden is established. In
the ultimate analysis the character of the employer or the destination of profits has no relevance in
the fixation of wages and dearness allowance.

91. We are fortified in the above view by the decision of the Constitution Bench of this Court in
Hindustan Antibiotics Ltd. v. The Workmen and Others. ((1967) 1 SCR 652 : AIR 1967 SC 948 :
(1967) 1 LJ 114). In that case on behalf of the appellant it was urged that as it was a Government
company in the public sector, the principles governing the fixation of wages applicable to
companies in the private sector do not have any relevance. On the other hand, on behalf of the
workmen it was contended that in fixing the wage structure including dearness allowance, the
question, who is the employer, is irrelevant and that only the needs of the employee are of
paramount importance. The contention on behalf of the workmen was accepted by this Court and it
was held that the same principles that have been laid down by the industrial adjudications and the
courts regarding the fixation of wage-scales and dearness allowance in respect of companies in the
private sector apply with equal force to companies in the public sector also. It was further held that
in the application of the industry-cum-region principle to be adopted to, distinction can be made
between one unit and another in the same industry in the fixation of wage-scales provided the test of
financial capacity is satisfied. It was further held that by and large the acceptance of the principle of
industry-cum-region will be more conducive to industrial relations and that the same principles
evolved by the industrial adjudication in regard to private sector undertakings will govern those in
the public sector undertakings having a distinct corporate existence.

92. Though the decision cited above had to deal with a claim for differentiation being made on
behalf of a company in the public sector and which claim was rejected, in our opinion, the basic
principle underlying the said decision will apply even with respect to the question whether the units,
having collaboration with foreign concerns can be taken into account for purposes of comparison. In
our opinion, the above decision warrants the conclusion that such units having foreign collaboration
or foreign companies doing business in India can be taken into account for purposes of being
considered whether they are comparable units. Of course, the test laid down by this Court for
treating one unit as a comparable one, will have to be satisfied, and once that test is fulfilled, there
can be no distinction made between such units and purely local units. Therefore, in our view, the
Tribunal, in the case before us, was perfectly justified in taking into account for purposes of
comparison, units having collaboration with foreign concerns and foreign units doing business in
India in the same region and being in the same industry. It follows, therefore, that the principles laid
down to the contrary in the awards relied on by Mr. Tarkunde, are erroneous.

93. Coming to the units relied on by the parties as comparable units, as mentioned earlier, the unions
relied on as many as 21 concerns as comparable with the appellant. No doubt some of the units
relied on by them were units having collaboration with foreign concerns. The appellant also in turn
filed statement Ex. C-26, referring to six companies which could be treated as comparable concerns.

94. The Tribunal rejected most of the units relied on by the unions on the ground that the
information furnished regarding such units were not adequate and complete regarding various
factors necessary to constitute a comparable unit. We have also gone through the statements filed by
the unions. In Ex. DU-2, one of the unions furnished, information regarding the business
performance of about nine concerns till the year 1964-65. Similarly, in Ex. DU-3, another union had
given the average performance of nearly ten units for the years 1962-63 to 1964-65. As it would be
more desirable to consider the financial capacity of the appellant in the light of the trading results
disclosed in the balance-sheets and profit and loss accounts from the years 1965-66 to 1969-70, it
must be considered that the information furnished in Exs. DU-2 and DU-3 cannot be considered to
be up to date and helpful. The unions also did not make any further attempt to supplement the
information contained in these two exhibits by furnishing information regarding the years
subsequent to 1964-65. No doubt, the unions have furnished particulars regarding one unit,
Burroughs Wellcome (India) Private Ltd., which will be dealt with later. Therefore, the rejection by
the Tribunal of most of the units relied on by the unions was justified.

95. The appellant company relied on six units mentioned in Ex. C-26. Those units are Cipla,
Chemo-Phama. Zandu, Opil, Sigma and Bengal Chemicals. But the company did not furnish
information regarding the business performance of these concerns for a period of years in the
immediate past. But it will be noted that the four units referred to in Ex. C-26, namely : Zandu,
Cipla, Opil and Sigma, had been considered by the Industrial Tribunal in its previous award
Reference (I.T.) No. 402 of 1963, when the scale of dearness allowance obtaining in the appellant
company was revised. On that occasion the Tribunal had held that it was only Cipla which came
nearest to the appellant-company and even there the dearness allowance obtaining in Cipla cannot
be taken for comparison. That means that these four units were left out of account and were not
treated as units comparable with the appellant. No fresh materials were placed by the appellant
regarding these four units after the decision of the Tribunal in Reference (I.T.) No. 402 of 1963.
Therefore, the Tribunal in the present case was justified in rejecting the claim of the appellant that
those four units are comparable concerns. The elimination of the four units, thus left for
consideration only two concerns, namely, Chemo-Phama and Bengal Chemicals. Even here the
unions had furnished statements Exs. DU-8 and DU-9, regarding these two units. In Ex. DU-8, the
business performance of Chemo-Phama from 1965 to 1969 was given and in Ex. DU-9, the business
performance of Bengal Chemicals from 1965 to 1970 was given. The unions had also furnished Ex.
DU-44 regarding the business performance of the appellant. A comparison of the statements
contained in Exs. DU-8 and DU-9 with the material relating to the appellant in Ex. DU-44,
regarding the paid-up capital, reserves and surplus sales, net blocks, net profits and gross profits, it
is quite clear that the business performance of Chemo-Phama and Bengal Chemicals do not come
anywhere nor that of the appellant. The appellant in all respects stands on a much higher footing.
The average gross profits of the appellant work out to Rs. 40,11,176/-, while the average gross
profits of Chemo-Phama works out to Rs. 5,31,511/- and that of the Bengal Chemicals to Rs.
11,39,553/-. Therefore, it is clear that these two units also cannot be treated as concerns comparable
with the appellant and hence the wage structure prevailing in those concerns cannot provide any
useful guidance.

96. We have already mentioned that the Tribunal has ultimately held that M/s. Burroughs Wellcome
(India) Private Limited is a concern comparable with that of the appellant. It is no doubt a foreign
company in the sense that its entire capital is held by foreign company as shown in the statement
Ex. C-11, filed by the appellant. But we have already rejected the contention that such a concern
cannot be ruled out of consideration for purposes of comparability.

97. A very servere attack has been levelled by Mr. Tarkunde in the Tribunal's treating M/s.
Burroughs Wellcome Company as a comparable unit. According to the learned counsel if the
various factors relevant for the purpose of comparison are considered, it will be clear that the
appellant cannot stand any comparison with this unit. Mr. Tarkunde further pointed out that instead
of taking only one unit for purposes of comparison, the Tribunal should have taken fair cross-
section of the industry in order to find out where exactly the appellant can be fitted in. It is no doubt
true that a fair cross-section of the industry should be taken into account. But in this case when all
the other units have been held to be not comparable with the appellant, this criticism levelled against
the approach made by the Tribunal cannot be accepted.

98. Regarding Burroughs Wellcome Company, the unions had submitted a statement Ex. DU-2-A
under a seal of confidential as it was a private limited company. A comparison of the information
contained in the said statement Ex. DU-2-A regarding the paid-up capital, reserves and surplus sales,
depreciation, development rebate, provision for taxation, net profits, gross profits net block and
dividend declared for the years 1967 to 1970, with the corresponding items in Ex. DU-4-A with
respect to the appellant shows that the both the units are substantially on a par. Normally, the
statements in Ex. DU-2-A could have been extracted in this judgment but for the fact that Burroughs
Wellcome Company being a private limited company and the statements having been furnished in a
sealed cover, they could not be made public. The paid-up capital in identical in both the concerns.
The average sales of Burroughs Wellcome Company and those of the appellant are substantially the
same. The difference between the net profits of the two is significantly small. The gross profits of
the two units are also close to each other. No doubt there are some small differences between the
two in these items, but they are of no significance. The various factors which have to be taken into
account for the purpose of a unit being treated as a comparable one as laid down by this Court have
already been referred to. If so, all those factors taken into account clearly show that Burroughs
Wellcome Company is a unit comparable with the appellant.

99. No doubt the appellant has relied on the ratio of employees to sales, as well as to debt equity
ratio and the percentage of profit to sales in respect of the appellant and the Burroughs Wellcome
Company. Ex. C-22 contains the ratio of employees to sales in 1968-69. Though there are certain
other units referred to therein, we will only advert to the particulars regarding the appellant and the
Burroughs Wellcome Company, which are as follows :

# "Ration of Employee to SalesName of the Year Sale No. of Per employeeCompany Employees
saleUnichem 68-69 Rs. 3,29,94,456/- 752 Rs. 43,875/-Burroughs 69 Rs. 2,50,00,000/- 425 Rs.
58,823/-."##

100. A reference to Ex. C-22 will show that the sales of the appellant is higher than that of
Burroughs Wellcome Company. No doubt the ratio per employee is slightly less in the case of the
appellant. It is also seen that the appellant employs nearly 752 workmen whereas Burroughs
Wellcome Company employs only workmen.

101. In Ex. C-18, particulars regarding Debt Equity Ratio have been given. That statement contains
particulars regarding the various firms including the appellant. In 1969 the capital of the appellant
was Rs. 101.86 lakhs. It had borrowed Rs. 05.89 lakhs and the percentage on borrowed funds to
capitals works out to 94.1%. It is no doubt true that there is no borrowed capital in Burroughs
Wellcome Company. In Ex. C-18 particulars regarding nine units have been given and it is seen that
except two units, all the other seven units, including the appellant, have borrowed. In fact it is
interesting to note that Glaxo, which has a capital of Rs. 1,196.81 lakhs had also borrowed Rs. 26.80
lakhs. Similarly, Chemco-Plama which had a capital of only Rs. 32.05 lakhs had borrowed Rs.
37.08 lakhs and the percentage works out to 115.7%. We are referring to these aspects because it
was stressed by Mr. Tarkunde that the Debt Enquiry Ratio in the appellant is very high and that it
has to pay a large amount by way of interest on borrowed funds which is not the case with
Burroughs Wellcome Company. But the statements contained in Ex. C-18 themselves clearly show
that borrowing for the purpose of business seems to be a usual pattern followed by the companies in
the region.

102. Ex. C-15 is a statement relating to percentage of profit to sales for the years 1965-66 to 1969-
70. No doubt the figures given therein show that the percentage of the profits has been fluctuating;
but, in our opinion, the particulars contained in the above exhibit, relied on by the appellant, do not
affect the findings of the Tribunal that Burroughs Wellcome Company is a unit comparable with the
appellant.

103. Another criticism has been levelled by Mr. Tarkunde is that the Tribunal has not taken into
account the prospects of the future business of the appellant. In this connection the appellant relied
on the coming into force with effect from January 1, 1971, of the Drugs (Price Control) Order,
1970. According to Mr. Tarkunde, whatever may have been the financial position of the appellant in
the past, its future business is bound to suffer in view of this price control order. He referred us to
the decision in Williamsons (India) Private Ltd. v. Its Workmen, ((1962) 1 LLJ 302) of this Court
where it has been held, amongst the various factors which have to be taken into account for the
purpose of fixation of wage-scales and dearness allowance, the prospect of future business is a very
relevant circumstance. This factor, according to the appellant, has not been taken into account by the
Tribunal.
104. We have earlier referred to the decisions of this Court regarding the principles governing the
fixation of wages and dearness allowance. It is no doubt a long a range plan and the prospects of
future business amongst other factors have also to be taken into account. The case of the appellant is
that in 1963, there has been a price freeze and that has affected its business and therefore the Drugs
(Price Control) Order, 1970 will affect its future business. We have already extracted in the earlier
part of the Judgment the trading results of the appellant from 1965-66 to 1969-70. If the price freeze
which came into force in 1963 had any affect, then it must have been reflected in the trading results
of the appellant. The trading results of the appellant during the years 1962-63 to 1964-65 are as
follows :

#"Particulars 1962-63 1963-64 1964-65Paid-up capital 44,91,000 44,99,250 44,99,500Reserves and
Surplus 4,76,569 10,10,753 15,05,353Sales 1,02,41,405 1,56,65,883 1,73,88,705Net Block
39,07,400 43,71,113 43,45,467Provision for Taxation 9,34,030 1,06,500 15,15,000Depreciation
2,97,243 3,79,256 3,90,878Development rebate 33,686 1,00,617 22,329Net profits 4,42,881
7,03,567 8,77,271." ##

105. A glance of the above statement clearly shows that though the paid-up capital remains the
same, there has been a steady rise in the reserves and surplus sales and net profits. Similarly, the net
block has also an increase. There has been no set back in the sales. On the other hand there has been
a steady rise in the sales. No doubt for the year 1969-70 the profits did go down, but the drop is
comparably small and the appellant has not been able to satisfy us that it is due to the price freeze.

106. Then the question is regarding the impact of the Drugs (Price Control) Order, 1970, which has
come into effect from January 1, 1971. In this connection it is necessary to refer to the speech made
by the Chairman of the Board of Directors of the appellant company at the Annual General Meeting
held on January 9, 1971. At this stage it may be mentioned that the accounting year of the appellant
company is from October 1 to September 30, of the succeeding year. On January 9, 1971, the
Chairman was giving a review of the working of the company for the year ending September 30,
1970. He had clearly stated that the impact of the Drugs (Price Control) Order, 1970, which had
come into force only recently will be felt by the company only after the year 1970-71. The appeal
was heard by us from January 3, 1972 and concluded only on January 10, 1972. As the Company, in
the previous years had been having its Annual General Meeting in early January, of each year, we
suggested to the counsel for the appellant that as the approximate trading results for the year
commencing from October 1, 1970 to September 30, 1971, would have been available by them,
they may be furnished so that it may be possible to find out the impact of the Drugs (Price Control)
Order, on the trading results of the appellant. But it was represented that the figures are not
available. It is not necessary for us to comment except to state that going by the fact that on former
occasions the figures had been ready by the first week of January to enable the Annual General
Meeting of the Company to be held, it would not have been difficult for the appellant to have
furnished at least the approximate figures, if really the trading results had shown a decline. The
appellant had missed an opportunity that was provided to it to establish that the Drugs (Price
Control) Order has adversely affected its business. Under those circumstances, it is not possible for
us to disagree with the view of the Tribunal that the impact of the Drugs (Price Control) Order will
not be such as to affect materially the business prospects of the appellant-company.

107. We may state that if the Drugs (Price Control) Order, materially affects the prosperity of the
appellant's trade, it would be open to it to raise a dispute for the reduction in the wage structure and
in case they are able to show that in view of the Drugs (Price Control) Order, their financial position
has been weekened to such an extent that they cannot bear the burden of wage structure fixed by the
present award, the matter may have to be examined its merits.

108. The question of fixation of wage-scales need not detain us very long. We have already
extracted the wage-scales prevailing in the appellant company as well as the categories of workmen
when the reference was made. We have also referred to the fixation of wage-scales by the Tribunal
on a comparison with the wage-scales obtaining in Burroughs Wellcome Company. The wage
structure as well as the grades that were prevalent in Burroughs Wellcome Company in pursuance of
the settlement, dated June 13, 1966 regarding the operatives and clerical and subordinate staff have
been incorporated by the Tribunal in its Award. We do not think it necessary to reproduce the same.
A comparison of the wage-scales in Burroughs Wellcome Company and the wage-scales fixed by
the Tribunal in the Award for the Company will show that the Tribunal has only made some slight
variation in view of the fact that it accepted the report of the assessor for the continuance of the
existing grades in the Company. As some of those grades were not existing in Burroughs Wellcome
Company, the Tribunal had to make some slight changes. Wherever it was possible the wage
structure in Burroughs Wellcome Company has been retained but the maximum has been raised a
little and some slight changes have also been made in the incremental stage.

109. Once Burroughs Wellcome Company is treated as a comparable unit, we are satisfied that the
wage-scales awarded by the Tribunal cannot be considered to be unjustified. The Tribunal's finding
regarding the financial capacity of the appellant has already been referred to and we accept the
same.

110. It was, however, pointed out by Mr. Tarkunde that in considering the comparability of a unit's
strength of the labour force has also to be given due importance. Mr. Tarkunde pointed out that
while the appellant employs 752 workmen, there are only 436 in Burroughs Wellcome Company as
is seen from the statement Ex. C-22. No doubt to this extent, the two units differ, but when one
bears in mind the business performance of both the units, there is not much of a substantial
difference. It may be that because of the fact that Burroughs Wellcome Company adopts more
modern methods of production, it was employing a smaller complement of workers. Having due
regard to all the other tests that have been satisfied, this difference in the strength of labour force
alone, in our opinion, cannot be given undue importance. It is pertinent to note that this Court in
Workmen of New Egerton Woollen Mills v. New Egerton Woollen Mills and Others (supra), did not
disagree with the view of the Industrial Tribunal which treated the respondent therein and the
another unit as a comparable unit, notwithstanding the fact that the respondent was employing at the
material time about 3,000 workmen whereas the unit which was treated as a comparable unit was
having the labour force of only about 1,000 men, in view of the fact that all other requirements for
comparability were satisfied. In fact, in the case before us, the Tribunal has adverted to this
difference of labour force of the appellant and Burroughs Wellcome Company, but nevertheless it
held that, that by itself is not sufficient to eliminate Burroughs Wellcome Company as a comparable
unit. We agree with this approach made by the Tribunal.

111. As objection was taken on the basis of Section 10(4) of the Industrial Disputes Act, 1947 that
the Tribunal has permitted the unions to revise their demand regarding classification and grades of
workmen and that the Tribunal has further committed an error in upholding the grades of
Stenographers, Assistants and Store-keepers and merging them with that of the Senior Clerks. We
are not inclined to accept this contention advanced on behalf of the appellant. We have already
referred to the fact that as question of classification and fixing grades were matters of a technical
nature, at the joint request of both the parties, the Tribunal appointed Sri Gadkari, as an assessor. It
was really in view of the stand taken by both the parties before the assessor and the Tribunal, after
the report was submitted by the assessor that the Tribunal has accepted the report that the existing
grades should continue. But as the workmen had to be fitted in the appropriate grades, the Tribunal
was justified in fitting in the categories the workmen and their grades as well as their scales of
wages. The above contention based upon Section 10(4) of the Industrial Disputes Act, at the most
can relate, if at all, only to the operatives. The report of Sri Gadkari has already been referred to. He
had suggested the retention of the existing categories. The workmen have necessarily to be
classified for the purpose of being put in particular categories and the wages also have to be suitably
fixed depending upon the category in which they are so fitted. Having due regard to the nature of
the reference, classification though jobwise and the fixing of wages of pay and fitting the workmen
in suitable categories were all matters incidental and as such the Tribunal has acted within its
jurisdiction in classifying the workmen and fixing the scales of pay after fitting them in particular
categories. In the view above expressed, we do not think it necessary to refer to the decisions
referred either by Mr. Tarkunde, learned counsel for the appellant or by Mrs. Urmila Kapoor, on
behalf of the respondent No. 2 as to when exactly the matter can be considered to be incidental to
the question referred for adjudication.

112. Before we take up the question of dearness allowance, one other point that requires to be
adverted to is the objection taken on behalf of the appellant regarding the raising in the gratuity
scheme the ceiling limit from 15 months to 17 1/2 months' basic wages. The Tribunal has adopted
the pattern obtaining in Burroughs Wellcome Company. We do not see any question of principle
involved in this matter and therefore we find no merit in the objection raised by the company.

113. The pattern of dearness allowance that was in force in the appellant company at the time of the
reference has been indicated already. We have also referred to the scale of dearness allowance fixed
by the Tribunal. There were different systems of dearness allowance for the operatives and the
clerical and subordinate staff. That much if a different system of dearness allowance for the
employees working under the same employer is not warranted, is clear from the decisions of this
Court in Greaves Cotton & Company and Others v. Their workmen (supra) and Bengal Chemical
and Pharmaceutial Works Ltd. v. Its Workmen (supra). Therefore, the Tribunal was justified in
devising a uniform scale of dearness allowance applicable to all the employees of the appellant. The
unions required a common scheme of dearness allowance of slab system to be introduced for all
employees. The appellant resisted the claim on the ground that there was already a scheme of
dearness allowance existing in the company and that there is no justification for revising the same.
But, nevertheless, the Tribunal has adopted, by and large, the scheme of dearness allowance which
was in vogue in Burroughs Wellcome Company. Normally, once Burroughs Wellcome Company is
treated as a unit comparable with the appellant, the Tribunal must be considered prima facie to be
justified in introducing the pattern obtaining in that unit. However, it is pointed out on behalf of the
appellant that slab system of dearness allowance does not obtain in any of the pharmaceutical
industries in the region.

114. The contention that because there was a system of dearness allowance in existence in the
company and therefore there was no justification for revising the same, cannot be accepted. A
similar contention raised in Remington Rand of India v. Its Workmen ((1962) 1 LLJ 287 : (1962) 4
FLR 508 : (1962-63) 23 FJR 831) was rejected by this Court. In that case there was a system of
dearness allowance providing for payment of not only a rate of percentage on the basic salary but
also a variation in the percentage on the rise or fall of the cost of living index. The workmen
demanded revision of the scale of dearness allowance on the ground that the cost of the living index
had increased. The claim was resisted by the company on the ground that the scheme of dearness
allowance then existing in the company itself provided for an increase in the cost of living index and
therefore no revision is required. This contention was not accepted by this Court. It was held that a
claim made by the workmen, if otherwise justified, cannot be rejected on the sole ground that a
provision is already made in an existing scheme of dearness allowance for adjustment depending
upon an increase in the cost of living index. This Court further held that if it is established that the
cost of living shows a tendency to rise a very high, the workmen would be entitled to claim and
there may be a change in the rate of dearness allowance originally fixed, so as to provide for more
neutralisation. It was further held that a claim made by the workmen will have to be properly
considered and adjudicated upon by the Tribunal. In fact, in that case, it is seen that there was only a
50 point rise in the cost of living index and nevertheless the revision of the scale of dearness
allowance by the Tribunal was upheld.

115. We may also refer to the decision of this Court in Workmen of Balmer Lawarie and Company
v. Balmer Lawarie and Company (supra) wherein it has been held as follows :

                  "If the paying capacity of the employer increases or the cost of living shows an
                  upward trend, or there are other anomalies, mistakes or errors, in the award fixing
                  wage structure, or there has been a rise in the wage structure in comparable industries
                  in the region, industrial employees would be justified in making a claim for the re-
                  examination of the wage structure and if such a claim is referred for adjudication, the
                  Adjudicator would not normally be justified in rejecting it solely on the ground that
                  enough time has not passed after making of the award, or that material change in
                  relevant circumstances has not been proved. It is of course, not possible to lay down
                  any hard and fast rule in the matter. The question as to revision must be examined on
                  the merits in each individual case that is brought before an adjudicator for his
                  adjudication."

116. On the date when the settlement was entered into between the appellant and its workmen on
April 20, 1966, the cost of living index was 630. From Ex. C-1 it is seen that in August 1969, the
cost of living index had gone up to 790 and from Ex. DU-10, dated December 8, 1970, it is seen that
when the second settlement was entered into between Burroughs Wellcome Company and its
workmen, the cost of living index had gone up to 800.1. It also seen that at the time of the award it
has gone up further to about 850 points. Therefore, from the date of the settlement in 1966 the cost
of living index had very rapidly gone up by 220 points. At the time when the demand for revision of
wage-scales and dearness allowance was made by the unions and when the reference order was
made by the Government, the cost of living index had gone up very high. That clearly shows that
the workmen had made out a case for revision of wage-scale and dearness allowance.

117. We have earlier referred to the scheme of dearness allowance fixed by the Tribunal in the
Award. The scheme provides for payment of a particular percentage on the basic salary and it also
provides for variation on 10 points. But the dearness allowance has been fixed on the Bombay
Working Class Cost of Living Index of 521-530. Though more or less the same pattern of dearness
allowance was obtaining in Burroughs Wellcome Company, the dearness allowance in the latter was
fixed at the Bombay Working Class Cost of Living Index of 491-500. The scale of dearness
allowance, as demanded by the unions, was on the basis of the cost of living index 401-410. It was
accepted by the appellant that the scheme obtaining in Burroughs Wellcome Company is More
advantageous from the financial point of view than the scheme of dearness allowance demanded by
the unions. In fact, the Tribunal itself has made a further concession in favour of the appellant by
adopting the cost of living index of 521-530 instead of 491-500 as was obtaining in Burroughs
Wellcome Company. The Tribunal has made this change in the cost of living index in view of the
fact that in the appellant company, there was an Incentive Wages Scheme in and by which
operatives were getting on an average about Rs. 28/- per month. Therefore the financial burden cost
on the appellant by the dearness allowance scheme fixed by the Tribunal is such that the appellant
can bear the burden.

118. In order to show that in the Bombay region the pharmaceutical units were adopting the slab
system of dearness allowance, the unions had filed a chart Ex. DU-1. It is evident from Ex. DU-1,
that out of 19 pharmaceutical units, referred to therein, at least 11 of them adopted the slab system
of dearness allowance which has been introduced in the case of the appellant in the Award. No
doubt, it is pointed out by Mr. Tarkunde that in the statement filed by the appellant, Ex. C-25, it will
be seen that none of the Indian owned units have adopted the slab system. But whether those units
have adopted or not, we have already indicated that no distinction can be made between a purely
local unit and a foreign unit doing business in India or an India unit doing business in collaboration
with foreign concern. When once such units can be taken into account as comparable units, the
pattern of dearness allowance obtaining therein can very well considered to ascertain the system
adopted by the industry as that will show the trend in the region. As pointed out above, at least 11
units, referred to in Ex. DU-1 have adopted system now introduced in the case of the appellant by
the Tribunal. Under those circumstances, when such system is prevailing in the industry in the same
region, it cannot be held that the Tribunal has committed any error, in introducing a similar pattern
in the case of the appellant. The slab system has been approved by this court as will be seen by the
decisions in Greaves Cotton and Company and Others v. Their Workmen (supra) and Bengal
Chemical and Pharmaceutical Works Ltd. v. Its Workmen (supra). Even in Bombay that such a
pattern of dearness allowance, as the one introduced in the case of the appellant, is existing is seen
by the decisions of this court in Greaves Cotton and Company and Others v. Their Workmen (supra)
and Kamani Metals and Alloys Ltd. v. Their Workmen. ((1967) 2 SCR 463 : AIR 1967 SC 1175 :
(1967) 2 Lab LJ 55). No doubt the industries therein were not pharmaceutical units. But that such a
system exists in Bombay region is clear from the above decisions.

119. Mr. Tarkunde referred us to the Award of the Industrial Tribunal in reference (I.T.) No. 411 of
1966 in Voltas Ltd., Bombay v. The Workmen (supra) employed under them, dated September 30,
1969, wherein the adoption of slab system has not been approved. On the other hand. Mrs. Urmila
Kapoor, learned counsel for respondent No. 2 has drawn our attention to a number of awards of the
Industrial Tribunal rendered during the years 1965 to 1968 wherein the slab system of dearness
allowance has been adopted in Bombay region. It is only necessary to refer to the award in the case
of May and Baker Ltd., Bombay v. Its workmen (supra), because that is a pharmaceutical unit. The
award was given in or about June, 1967 and it is seen that the dearness allowance on the pattern now
given by the Tribunal in respect of the appellant has been adopted.

120. We have already referred to the fact that in Ex. DU-1, it is seen that as many as 11
pharmaceutical units in Bombay region have adopted the pattern of granting dearness allowance on
the slab system now incorporated in the presented award. Though most of the units referred to
therein could not be treated as units comparable with the appellant because of lack of full
information regarding material factors, yet those concerns can be taken into account inasmuch as the
system obtaining those concerns will show that the slab system is not something new to the
pharmaceutical units. We have already referred to the award in May and Baker Ltd., Bombay v. Its
Workmen (Supra). These facts clearly show that the scheme of dearness allowance provided in the
award before us in respect of the appellant is not anything new. On the other hand, the Tribunal has
only adopted the system prevailing in the region in respect of pharmaceutical unit.
121. So far as the financial burden is concerned, we have already referred to the findings recorded
by the Tribunal. Even on the assumption that the Tribunal was not justified in preceding on the basis
that 52 chemists are not covered by the reference, in our opinion, the additional burden that will be
cast on the appellant can be easily borne by it. Therefore, we see no error in the scheme of dearness
allowance introduced, in the case of the appellant, by the Tribunal.

122. The only other point that requires to be considered is in respect of the direction given by the
Tribunal regarding the incentive Bonus Scheme in respect of which the appellant had given notice
of change under Section 9-A of the Industrial Disputes Act, 1947. We have already referred to the
nature of the scheme that originally existed and the modification sought to be made by the appellant.
We have also pointed out that the Tribunal has not accepted most of the recommendations made by
Sri Tulpule, who was appointed as an assessor on the joint application of both the parties. The
Tribunal has stated that it is desirable that a scheme is worked out, if possible, by consent of parties
for the purpose protecting the interest of the workmen at the increase base performance index.

123. According to Mr. Tarkunde the Tribunal itself should have gone into the matter and evolved a
scheme. No doubt, it would have been desirable if the Tribunal had actually evolved a scheme. But
the Tribunal has stated that the necessary material for that purpose has not been made available and
as such it has not been possible to devise a scheme calculated to afford protection to the incentive
earning of a workmen at the raised base performance index. In fact, we also suggested to the
counsel that the parties may consider the matter and submit a scheme for that purpose. But it was
represented to us on February 9, 1972, by Mrs. Urmila Kapoor, learned counsel for respondent No.
2, that it has not been possible for the parties to arrive at an agreement in respect of that matter, at
present. Therefore, there is nothing further that could be done by this court in this regard; and the
result is that the observations made by the Tribunal in this regard will have full effect.

124. In the result, all the contentions of the appellant are rejected and the Award of the Industrial
Tribunal in respect of the matters in controversy in the appeals confirmed. All the appeals are
dismissed. In Civil Appeal No. 1091 of 1971, the appellant will pay the costs of respondents Nos. 1
and 2. In the other appeals, parties will bear their own costs.

125. The appellant will have three months' time from today for payment of the amounts due under
the award.

</html