Das Gupta, J.— By an order made on January 13, 1961 in Civil Appeal No. 554 of 1960 we remanded to the Tribunal for disposal in accordance with law two matters in dispute between the Airlines Hotel (Private) Ltd., and its workmen. These were: (1) the dispute as regards the wages; and (2) as regards the provident fund. We are no longer concerned with the question of the provident fund.
2. On the question of wages, the workmen's demand was for the fixation of wage scales for different categories of workmen at the rates mentioned therein. The Tribunal however instead of fixing any wage scales, directed increases to be made in the wages of different categories of workmen on an ad hoc basis — one increment from January 1959, another from January 1960 and the third from January 1, 1961. As regards some of the categories he also fixed a minimum at which anybody should be recruited to that category in future. We set aside this portion of the award and remanded the matter for further hearing as we were of opinion that there were no circumstances in the present case which would justify a departure from the ordinary rule that if the dispute referred is on the question of wage scale's ad hoc increases should not ordinarily be given and for the further reason that the additional burden in the shape of increased wages had been imposed by the Tribunal without giving a definite finding as to the employer's financial position.
3. As the services of Shri I.G Thakore who formed the first Tribunal were no longer available to the Bombay Government by reason of his allocation to the State of Gujarat the proceedings were transferred by an order of the Bombay Government to the Industrial Tribunal consisting of Mr Meher. On September 4, 1961 Mr Meher made his award fixing wage scales for the different categories of workmen. The Tribunal has also ordered the new wage scales to take effect from January 1, 1959 in the case of all workmen except in some cases which were specified. Against this award the employer, the Airlines Hotel has preferred the present appeal by special leave of this Court.
4. Two main contentions have been urged before us on behalf of the appellant on the question of wage scales. The first is that in fixing the wage scales the Tribunal has not taken into consideration the wages paid for similar employees by comparable concerns in Bombay city where the appellant-hotel is situated. The other contention is that in spite of the directions in the order of remand the present Tribunal has not properly considered the financial position of the Company.
5. The first contention is clearly without any substance. The Tribunal has made a definite statement that it has taken into consideration the different wage scales in other hotels in the region and we are not satisfied that that was not done.
6. The position is somewhat different as regards the question of the company's financial position. The Tribunal had before it the balance sheets of the Company for the years 1951 to 1959. It considered also the statements of profits and loss accounts for all these years submitted by the Company in Ex. C-9 and similar statements (Exs. U-l and U-15) given on behalf of the Union. After rightly rejecting the Union's claim that losses incurred in respect of the Company's London business should not be deducted from the Indian profits the Tribunal considered the Union's claim that the Company's share of the service charges paid by the customers paid to some of the directors as remuneration for the work done by them should be added back to the profits. The Tribunal noted that with the exception of the Managing Director the other directors were working for seven other companies and observed that no satisfactory explanation was given as to why these amounts had not been included and accounted for in the profit and loss account. Accordingly, it accepted the Union's claim that these amounts should be added to the profits. The Union's further claim for adding Rs 21,138 incurred as legal expenses in the year 1956 in connection with a criminal case against the Managing Director, Manager and Barman of the Company was however rejected. The Tribunal however pointed out that this was an unusual and extraordinary expenditure and was not likely to recur and consequently fall in profits in 1956 could not be taken as a sure guide to the Company's prospects in future. The Tribunal recorded its final conclusion thus:
“Giving careful consideration to the financial position of the Company I have come to the conclusion that it has definitely turned the corner after the loss in the Le Vendome venture, its financial position for the five-year period 1955-1959 can be said to be satisfactory.”
7. It then proceeds to observe that there was every reason to be optimistic about the future of the Company, that the Hotel was in a very good locality and apart from the tourist traffic the demand for temporary as well as permanent accommodation in Bombay city had been increasing and states:
“The financial position of the Company permits fixation of wage scales, and the retrospective effect that I propose to give is also within the capacity of the Company.”
8. We do not propose to depart from our usual practice in appeals under Article 136 of the Constitution to refuse to examine afresh the evidence on which clear and definite findings have been recorded by the court of facts. At the same time we cannot but think it unfortunate and unsatisfactory that in spite of the directions made in the order of remand the present Tribunal has also not thought fit to make a clear assessment of the profits and losses made by the Company. It has therefore been necessary for us to examine generally the profit and loss position of the appellant Company. Such examination has led us to the conclusion that while the position of the Company is in general not unsatisfactory the profits made by it for the ten years ending with 1959 have yielded only a very moderate return on the capital invested. According to the Company's statements the total profits for the 10 years would be roughly about Rs 1,20,000, while according to the Union's figures the profits would be about Rs 2,00,000. It has to be noticed that even Rs 2,00,000 in ten years mean only Rs 20,000 in a year.
9. In this state of things we are constrained to say that the provision for yearly increments in the wage scales awarded will put too heavy a burden on the Company's financial resources. It was stated before us on behalf of the appellant that the wage scales as awarded would increase the Company's expenditure on wages by Rs 4164 in the first year. This position is not challenged by the workmen. The consequence of the yearly increment as provided in the award would be that in each successive year after the first year the wage burden would increase by a similar amount of Rs 4164 from year to year. In five years' time the wage burden will thus increase by more than Rs 20,000 so that the entire profit position is likely to be wiped out. Therefore, even after taking into account the chance of higher profits in future years than in the past, it is difficult to deny that the wage scales as awarded with its annual increments might force the concern to close its doors. That will be a tragic prospect for both the employer and the employees. We are fully convinced that if the Tribunal had come to a more definite conclusion as regards the profit position of the Company in the last ten years as it should have done, especially in view of the directions given in the order of remand, it should have hesitated to award this wage scale with its annual increments. That is why in spite of our reluctance to interfere with such details in the awards made by Tribunals in appeals on special leave we have come to the conclusion that the award under appeal must be modified so as to lessen the burden on the employer to some extent. In our opinion, it would be fair and proper to maintain the wage scales awarded by the Tribunal with this modification that the increments would be every two years and not every year. We modify the award accordingly.
10. On behalf of the Company Mr Sastri also attacked the direction in the award as regards the retrospective operation of the wage scales. It was submitted by the learned counsel that as a result of this direction the Company shall have to pay to the workmen by way of back wages about Rs 45,323.17 np up to the end of September 1961. The correctness of this calculation has not been challenged before us on behalf of the workmen. In view of the poor profit position of the Company during recent years and the lack of any substantial reserves it will be unjust and improper to place such a heavy burden on it. Dealing with this question on the date from which the new scales should take effect the Tribunal has pointed out that the reference was made on June 7, 1958 and in the previous award Shri Thakur had given ad hoc increments for the years 1959, 1960 and 1961. On a consideration of the circumstances and also the burden on the Company by giving retrospective effect, the Tribunal has directed the new scales to take effect from January 1, 1959 except in certain cases specified by it. There would have been no occasion for interfering with this direction were it not for the fact that the Tribunal's consideration of the financial position of the Company and its ability to bear the additional burden does not appear to be quite clear. In view of what we have found to be the profit position of the Company during the last few years and the further admitted fact that no substantial reserves have been built up by the Company, it would be just and proper to reduce this burden also to some extent. Accordingly, we direct that the new wage scales awarded by Mr Meher should come into effect from January 1, 1961 in all the cases where under the award it would come into effect from January 1, 1959.
11. The appeal is thus allowed in part as indicated above. We make no order as to costs.