Labour Laws:
Payment of Dearness Allowance – Settlement between the employer-Board and its workmen u/s. 18 of Industrial Disputes Act – As per one of the terms of settlement Dearness Allowance rates were to be revised twice in a year i.e. on 1st January and 1st July taking into account the variations in previous 12 months average of All India Consumer Price Index Numbers – Pursuant to the settlement, in the proceedings of the employer-Board it was decided that Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to its employees at the same rate and from the same date – State Government, due to financial crunch revised the Dearness Allowance later than it was granted to the Central Government employees for the relevant year – Employer-Board also adopted the order of State Government in revising the Dearness Allowance – Respondent-Workers’ Union filed writ petitions seeking direction to pay Dearness Allowance at the rate and from the date when it was paid to the Central Government employees – Single Judge of High Court allowed the petitions – Division Bench of High Court affirmed the order of Single Judge – On appeal, held: Payment of Dearness Allowance was governed by the Settlement and the Board Proceedings – All along, the revision of Dearness Allowance had been paid at par with the employees of the State Government – There is no rule or obligation on the State Government to always adopt the Dearness Allowance as revised by Central Government – The revision of wage or Dearness Allowance would depend upon the ability and financial position of the employer– The employer-board is run by the State Government – It was within the power of the Board to set a cut-off date for payment of revised Dearness Allowance keeping in view financial constraints of the State – Therefore, employees’ demand for revision in Dearness Allowance at a higher rate than what was granted by the State Government to its employees is not warranted – Industrial Disputes Act, 1947 – s. 18.
Allowing the appeals, the Court
HELD: 1. Payment of Dearness Allowance was governed by the Wage Settlement dated 08.07.1998 and the Board Proceedings BP (FB) No.58 dated 18.07.1998. The increases in Dearness Allowance which fell due w.e.f. 01.07.1998, 01.01.1999, 01.07.1999, 01.01.2000, 01.07.2000, 01.01.2001 and 01.07.2001 were all paid as per the above agreed term only. As per settlement dated 08.07.1998, the Dearness Allowance rates were to be revised twice in a year i.e. on 1st January and on 1st July taking into account the variations in the previous twelve months average of the All India Consumer Price Index Numbers adopting the same formula as followed by the State Government. The Board Proceeding BP(FB) No.58 dated 18.07.1998 stipulated that the revised Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. In the subsequent wage settlement entered into between the appellantBoard and the respondent-union on 15.10.2005 (w.e.f. 01.12.2002) stipulates the existing practice of sanction of Dearness Allowance to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. The subsequent settlement also reiterates that all along, the revision of Dearness Allowance to the employees of the Board was on par with the employees of the State Government. [Para 19][161-C-F]
2. The respondent(s) union having agreed that the revised Dearness Allowance will be sanctioned as granted by the State Government to their employees, the appellant-Board has been consistently adopting the revised rates of Dearness Allowance following various State Government orders. Having agreed for the grant of revised Dearness Allowance on par with the State Government employees, the respondent(s) union cannot seek for revision in Dearness Allowance at a higher rate than what was granted by the State Government to its employees. [Para 19][161-G-H]
3. The High Court did not keep in view the well settled principles that the revision of wage or Dearness Allowance would depend upon the ability and the financial position of the employer. In G.O. Ms. No.346 in and by which the Government of TN revised the Dearness Allowance from 45% to 49% (w.e.f. 01.10.2002), it was made clear that the Government of TN was facing extremely difficult financial position and therefore, decided to sanction additional four per cent (45% to 49%) of Dearness Allowance to the employees of the State Government w.e.f. 01.10.2002. Having regard to the difficult finance situation which the State and the Board were facing and having regard to the terms of the settlement, respondent(s) union cannot seek for sanction of enhanced rate of Dearness Allowance on par with the Central Government employees. [Para 21][162-C-D]
4. There is no rule or obligation on the State Government to always adopt the Dearness Allowance as revised by the Central Government. It is absolutely not necessary for the State Government to adopt the Dearness Allowance rates fixed by the Central Government. It should be looked from the financial position of the State Government to adopt its own rates/revised rates of Dearness Allowance. The Board, being the State Government undertaking, the money has to come from the State Government. Keeping in view the extremely difficult financial position of the State Government, Board’s order revising the Dearness Allowance rate from 45% to 49% only from 01.10.2002 cannot be said to be arbitrary or in violation of the terms of the settlement. [Para 22][162-E-G]
5. It is not disputed that Board is run by the State Government and unless the funds are provided by the State Government, the Electricity Board would not have adequate funds of its own to pay the wages. It is within the power of the Board to set a cut-off date for payment of revised Dearness Allowance keeping in view its financial constraints. Moreover, the settlement agreement and the decisions taken by the Board in the Board Proceedings are to be harmoniously construed. Having regard to the financial difficulties which the State Government was facing, appellant-Board being a State Government undertaking, decided to adopt the State Government’s revised Dearness Allowance at the same rate and from the same date. In view of extremely difficult financial situation, not only the State Government employees but all the employees of various other corporations were granted revised Dearness Allowance at the rate of 49% only w.e.f. 01.10.2002 and 52% w.e.f. 01.07.2003. In that factual scenario, the decision of the Board to adopt the rate of Dearness Allowance as granted by the State Government cannot be said to be arbitrary. The respondent(s) union cannot insist for revision of Dearness Allowance at a higher rate than what was being paid to the State Government employees. [Paras 28 and 31][164-F-H, 165-A, 166-D-E]
6. It is not correct to say that the Board has unilaterally altered the terms of settlement between the parties that Dearness Allowance rates will be revised twice in a year taking into account the variations in the previous twelve months average of the All India Consumer Price Index numbers. Board’s proceeding BP (FB) No.58 dated 18.07.1998, inter alia provides for various other terms like work norms, retrenchment etc. It is not the case of the respondent(s) union that those terms of the settlement were not acted upon. The respondent(s) union are not right in taking one clause from the Board proceeding dated 18.07.1998 and contending that in so far as payment of Dearness Allowance is concerned, the Settlement dated 08.07.1998 has been unilaterally altered. The respondent(s) have not challenged that portion of the Board’s proceeding BP(FB) No.58 dated 18.07.1998; the respondent(s) cannot approbate and reprobate the Board Proceedings dated 18.07.1998. [Paras 29 and 30][165-D, G-H, 166-A-B]
Workmen of Gujarat Electricity Board, Baroda v. Gujarat Electricity Board, Baroda (1969) 1 SCC 266 : [1969] 1 SCR 174; Bengal Chemical &
Pharmaceutical Works Ltd. v. Its Workmen [1969] 2 SCR 113; Kamani Metals & Alloys Ltd. v. Their Workmen [1967] 2 SCR 463; T.N. Electricity Board v. R. Veerasamy and Ors. (1999) 3 SCC 414 : [1999] 2 SCR 221; State of Punjab and Others v. Amar Nath Goyal and Others (2005) 6 SCC 754 : [2005] 2 Suppl. SCR 549 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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