Greaves Cotton & Co. Ltd. v. Workmen

By FG LawKit

The Industrial Tribunal was adjudicating disputes concerning wages, dearness allowance, and gratuity between four appellant companies (including Greaves Cotton and Co. and Ruston and Hornsby) and their workmen.
The companies were diverse: some were primarily investment/distribution concerns, and others were manufacturing units (oil engines, pumps, ropes).
The Tribunal dealt with clerical/subordinate staff and factory workers separately.
For clerical and subordinate staff, the Tribunal revised wages and dearness allowances after comparing them with comparable concerns.
For factory workers, the Tribunal prescribed certain rates of wages but gave them the same dearness allowance as the clerical staff and directed adjustments on the same basis.
Gratuity was granted with a maximum of 20 months' salary, subject to forfeiture to the extent of financial loss caused by an employee's misconduct.

Whether the Tribunal erred in not following the industry-cum-region principle when fixing wage scales, particularly for factory workmen.
Whether the Tribunal was justified in fixing wage scales for factory-workmen and granting dearness allowance to all categories of staff.

The appeals regarding retrospective effect, adjustments, and wage/dearness allowance fixation for clerical and subordinate staff were dismissed (upheld).
The appeals regarding gratuity were dismissed (upheld).
The appeals concerning factory workers were allowed, and the cases were sent back to the Tribunal for wage structure adjustments. The new award was to come into effect on April 1, 1959.

The judgment is a seminal authority on the "Industry-cum-Region" principle:

Principle of Fixation: The Court observed that the proper basis of fixation of wages and dearness allowance is industry-cum-region.
Emphasis on Industry: Where there are a large number of industrial concerns of the same kind in the same region, it would be proper to put greater emphasis on the industry part of the principle.
- Reasoning: This approach would put all concerns on a more or less equal footing in the matter of production costs and, therefore, in the matter of competition in the market. This applies equally to clerical and subordinate staff whose wages also factor into production costs.
Emphasis on Region: Where the number of comparable concerns is small in a particular region (and thus the competition aspect is less important), the region part of the formula assumes greater importance, particularly with reference to clerical and subordinate staff.
Tribunal's Error: The Tribunal, in fixing wages for factory workmen, failed to take into account comparable manufacturing concerns in the same industry and region and apply the wage-scales on the same lines. This failure to properly emphasize the industry part for the factory workers warranted setting aside that part of the award.

Uniform Dearness Allowance: The Supreme Court affirmed the view that all categories of staff getting the same wages and posted at one place should generally be given the same scale of dearness allowance irrespective of the fact that they are working as clerks, subordinate staff, or factory workmen.
Balancing Act: Industrial adjudication sometimes leans on the industry part of the formula and at other times on the region part, depending on the number of comparable concerns and the need to maintain competitive equality in production costs.