KILLICK NIXON LIMITED versus KILLICK & ALLIED COMPANIES EMPLOYEES UNION

Citation: [1975] SUPP. 1 S.C.R. 453 · Decided: 02-05-1975 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Case Partly allowed
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Judgment (excerpt)

_I\_ 
KILLICK NIXON LIMITED 
v. 
KILLICK & ALLIED COMPANIES EMPLOYEES UNION 
May 2, 1975 
[H. R. KHANNA, P. N. BHAGWATI AND P. K. GOSWAMI, JJ.J 
Industrial Dispute-Fixation of ceiling on D-. A .-Principles. 
The appellant-company wanted to introduce the following scheme of D.A . 
• ( 
for its clerical staff and drivers. 
Basic Pay slabs. 
Jst Rs. JOO 
2nd Rs.JOO 
Rs. 201 to Rs. 500 
Over Rs.500 
Percentage Of 
basic salary 
(C.P.l. 441-450) 
120 
4~ 
30 
25 
Maxjn1um D.A.R'> 325 
variation for 
every 10 points 
of C.P.I. 
5% 
2% 
1% 
Placing the ceiling of Rs. 325 on the D.A. was not acceptable to the 
employees and a reference \vas made to the Indue'tirial Tribunal anp. the Tri-
bunal removed the ceiling. 
In appeal to this Court, 
HELD: 
'\Vhile the question of the desirability of ceiling on 
D.A. was not in 
issue in any references to Tribunals or appeals therefrom, referred to by the 
45 3 
A 
c 
D 
E 
" 
parties, the question of imposing a ceiling on D. A. is not an absolutely alien 
F 
phenomenon. Although it might not have been the general practice, ceiling 
was not rejected out of hand as irrational or un\just by unions in the course 
of collective bargaining in the Bombay region. in which the head-office· of the 
appellant is situated. In the case of the employees under 'the CeRtral Govern-
"' 
ment also a kind of ceiling has been in vogue. [461F.G., 462A] 
(I) The problem of imposing or removing a ceiling on D. A. has to be 
viewed from the following among other important aspects : 
(1) Condition of the wage scale prevalent in the company. 
(2) Condition of the wage level pre~alent in the industry and the 
region. 
G 
(3) The wage -packet as a whole of each earner in the company 
with all ameni.ties and ·benefits and his ability and potency to 
cope with the economic requirements of daily existence consis-
tent with his status in society, responsibilities, efficiency at work 
lI 
and industrial peace. 
· 
( 4) The position of the company viewed in relation to other compa-
, rable concerns in the industry and the region. 
(5) Peremptive necessity for full neutralisation of the cost of 
living at the rock-bottom of wages· scale if at, or just above, 
the subsistance level. 
454 
SUPREME COURT REPORTS 
[1975] SUPP· S.C.R. 
A 
(6) The rate of n_eutraiisatio'n \vhich is being given to the em-
ployees in each salary slab. 
B 
c 
D 
E 
(7) Avoidance of huge distortion of \Vage differentials taking into 
reckoning all persons employed in the concern. 
(8) Degree of sacrifice necessarv even on the part of workers in 
general interest. 
-
(9) The· compulsive necessity of securing social and distributive 
justice to the workmen. 
_ 
(10) Capacity of the company to bear the additional burden. 
(11) Intere~t of national economy. 
(12) Repercussions on other industries and society as a whole. 
(13) The state of the consumer price Index at the time of the 
decision. 
( 14) Forebodings and possibilities in the forseeable future as far 
as can be envisaged. 
( 15) Price indices have now assumed menacing figures. 
Any 
problem regarding wage or D.A. has to be considered in that 
• background and at the same time not losing sight 
of 
the 
national economy. 
[466E-H, 467A-C] 
IL The '.removal of ·ceiling in the instant case is not justified even though 
(i) the appellant company is a prosperous company with capacity to bea; 
the additional financial burden if the ceiling is removed, and (ii) the consumer 
price index has been soaring higher and higher; because : [465A-B, 4670] 
(a) The unprecedented rise in the consumer price index produces 
a steep rise in D.A. 
[458H] 
(b) The absence of ceiling on D.A. can thus result in curious ano-
malous situations wherein the pay packet of the clerical staff 
would exceed the pay packet of junior executives which would 
hardly be conducive to discipline, efficiency and effective exer-
cise of control. 
[463-GA] 
F 
(c) Although the appellant employs a total of 1142 workmen in 
G 
its va'fious factories and branches, the dispute relates to only 
265 workers in the head-office. 
A general problem like im-
position of ceiling on D.A. in a company ca001ot be treated 
on the statistical burden relevant only to a section of the 
employees, [463C-E] 
III. D.A. being intimately connected with the cost of living, the matter 
cannot be judged by the test submitted by the workmen, namely, that there' 
cannot be a ceiling on D.A. unless there is a ceiling on profits. 
[467-F] 
IV. A1so, in dealing
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