Financial Position Of Employer Strong Factor In Fixing Wage Structure Of Employees: Supreme Court

While setting aside a High Court judgment over an industrial dispute, the Supreme Court recently reiterated that financial capacity of an employer is an important factor which cannot be ignored while fixing wage structure of employees.

The Bench of Justices Aniruddha Bose and Sanjay Kumar was deciding on an appeal against a judgment of the Bombay High Court directing wage revisions, when it said that though High Courts may not altogether avoid reappreciating evidence, the appropriate course in the present case would have been for the court to remit the matter back to the Industrial Tribunal.

"In the given facts where the employer seriously contested the use of the concerned units as comparable ones, and highlighted its difficult financial position, the proper course would have been to remit the matter to the Industrial Tribunal rather than entering into these factual question independently in exercise of the writ jurisdiction. This exercise would have required leading of evidence before the primary forum, the Industrial Tribunal in this case", the court said.

Background

The genesis of the case lay in a charter of demands being raised by the appellant (employees' Union) in 2008, pertaining to wage/pay scale revisions and certain allowances. The Tribunal's award, which granted relief to the employees under certain heads, was challenged before the Bombay High Court by both the Union as well as the respondent-employer. With respect to four demands, the High Court allowed the Union's appeal but on the remaining 7 demands, the Tribunal's award was upheld.

A review petition was filed against the High Court judgment by the appellant-Union, claiming that averments with respect to allowances were not considered. However, the same was dismissed. The matter then reached the Supreme Court in form of 3 appeals.

Submissions by the Parties

Before the top Court, the employer contended that the High Court could not have entered a fact-finding exercise and reappreciated evidence, while testing legality of the award. It was further argued that the units with which the High Court made the employer's comparison were not "similarly situated" (having regard to their industrial output and financial position).

Besides the above, the employer emphasized that the High Court ignored its negative financial status on the ground that the losses were "miniscule", as well as granted certain allowances without any evidence.

The appellant-Union, on the other hand, countered that it was open for the High Court to undertake some form of appreciation of facts. It also pled that jurisdiction of a High Court under Article 226 is wide enough for it to decide factual issues instead of remanding a matter.

Observations by Supreme Court

The Supreme Court Bench, at the outset, took note of precedents on the issue, including Gujarat Steel Tubes Ltd. and Others v. Gujarat Steel Tubes Mazdoor Sabha and Others, to underscore that High Courts, in appropriate cases, can go into facts while examining an award of a Tribunal.

Next, it was recapitulated that for revision of wages, the standard criteria to be followed by an industrial adjudicator is to apply the industry-cum-region test, under which "the prevailing pay and other allowances should be compared with equally placed or similarly situated industrial units in the same region".

The Court added that in determining such comparability of units, financial capacity of the employer shall be a strong factor. In this regard, reference was made to the decisions in A.K. Bindal v. Union of India & Ors. and Mukand Ltd. v. Mukand Staff & Officers Association.

So far as it was pointed out by the employer that it was facing losses and the High Court called for fresh charts during the hearing, the Bench held that in the given facts, it would have been proper to remand the matter to the Tribunal.

Speaking of the High Court's jurisdiction to reappreciate evidence, the Bench said, "Analysis of the authorities relied on by the learned counsel for parties reflect the position of law on this point to be that the High Court ought not to reappreciate evidence and substitute its own finding for that of the Tribunal, it would not be beyond the jurisdiction of the High Court in its power of judicial review to altogether eschew such a process".

It was concluded that the High Court's appreciation of evidence was not proper and even the employee-Union's plea for treatment of overtime wages in computation of allowances needed to be re-examined.

Decision

Accordingly, the Supreme Court set aside both - the award of the Tribunal and the judgment of the Bombay High Court. It ordered that the Tribunal shall decide the matter afresh within 6 months.

Counsels for appellant: Senior Advocate Jamshed P Cama; AoR Anil Kumar Mishra-I; Advocates Prashant Pavaskar, Supantha Sinha, Aditya Jain - I and Ankit Dhawan.

Counsels for respondents: Senior Advocate Sanjay Singhvi; AoR Seshatalpa Sai Bandaru; Advocates Bennet D' Costa, Jignasha Pandya and Nitin S Tambwekar.

Case Title: The VVF Ltd. Employees Union v. M/s. VVF India Limited & Anr., Civil Appeal Nos. 2744 - 2745 of 2023 (and connected matter)

Citation : 2024 LiveLaw (SC) 299

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