LexMANAGEMENT OF SHRI CHALTHAN VIBHAG KHAN UDYOG SAHAKARI MANDALI LTD. ETC . versus B. S. BAROT MEMBER, INDUSTRIAL COURT, GUJARAT, AND ANR. ETC.
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509 MANAGEMENT OF SHRI CHALTHAN VIBHAG ~HAN A . UDYOG SAHAKA"RI MANDALI LTD. ETC. ~. B. S. BAROT MEMBER, INDUSTRIAL COURT, GUJARAT, AND ANR. ETC. September 4, 1979 [S. MURTAZA FAZAL ALI, P. S. KAILASAM AND A. P. SEN, JJ.] LAbour law-Dearnes.s allowance to workers-Its nature-If could be given at 125% of incroose in the. cost of living-Depreciation, if should be a fir!t charg~ in arriving at .the capacity of the industry to pay wages. The respondent workmen who were employees of Sugar mills in the State of Gujarat demanded grant of dearness allowance, among certain other benefits, <Jn the basis of revised scales for sugar factories in Uttar Pradesh. The Indus- trial Court, Gujarat increased the dearness allowance on a graded scale spread over three years. B c On appeal the High Court set aside the award by the Industrial Court in D respect of phasing but confirmed the award in regard' to dearness allowance and directed that the U .P. pattern should be given full effect with retrospective .effect from the date mentioned i~ the award. The employers questioned the correctness of the High Court's judgment on the ground that (1) grant of neutralization of variable dearness allowance at 125% is far in excess of what is permissible under the industrial Jaw and (2) E . the High Court failed to take into account depreciation in arriving at the financial capacity of the industries while fixing the wage structure. IHELD : 1. (a) Variable dearnessc allowance cannot be more than 100% neutralization. [5170] (b) The purpose of dearness allowance is to neutralise a portion of the increase in the cost of living due· to rise in prices. Neut~alization may be F such as to neutralize fully the increase in the cost of living or may be restricted to only a portion of the increase. Cent percent neutralization can be achieved if the increase in the cost of living is fully compensated so that the pay of the ·workers is not adversely affected. But an award of more than 100% of· increase in the cost of living would be more than neutralization and would in effect -give the worker an increased wage. The result would be that · the worker would be getting an increased wage packet whenever there is a price rise, a G result which would not have been envisaged in making provision for grant of dearness allowance. '[5160-GJ · Clerks of Calcutta Tramways v. Calcutta Tramways Co. Ltd., [1956] S.C.R. '772, Ka,mani Metals and Alloys Ltd. v. Their Workmen [1967] 2 S.C.R. 463, fJengal Chemical and Pharmaceutical Work, Ltd. v. ltl Workmen, A.I.R. 1969 S.C. 360, Silk & Art Silk Mills Association1 Ltd. v. Mill Mazdoor Sabha, • H [1973] 1 S.C.R. 277 and Killick Ni'xon Ltd. v. Killick & Allied Companies Employees Union, [1'975] Supp. S.C.R. 453; followed, 14-531SCI/79 510 SUPREM;E COURT REPORTS [1980] 1 s.c.tt. A (c) It is not correct to say that neutralization of more than 100%. dearnw • c allowance is based on the seasonal nature of employment in the industry. The retention allowance provided to seasonal workers in sugar industry is 1<> mitigate the hardship of unemployment during the off season. [517A-B} 2. (a) Section 66(1) of the Gujarat Cooperative Societies Act lll61 requires .that taxes and depreciation should be deducted from gross profits for arriving 'at net profit. -That does not mean that wages and dearness allowance could only be determined after the net profits are arrived at. The sub-sectioa itself provides that contributions. towards provident fund and gratuity even of its employees should all'be deducted from the gross profits for arriving at the net profits. The provisibn for deducting depreciation occurs after providing • for contn"bution towards provident fund and gratuity. The determination of the net profits under the section is for different purpose, namely, for appro~ prlation of the net profit as provided for in the Act and does not in any way support too contention of the appell!tnt. [518E-F1 D (b) It is settled law that in fixing fatr wages or dearileliS allowance or for making contribution to provident fund or providing for gratuity the financial capacity of the industry to bea'r the additional burden will have to be takea into account On principle of social justice with the development of industrial law it bas now been accepted that when the industry can bear the burden, pro- vision should be made for provident fund and gratuity schemes. In determin- in
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