Supreme Court: Employer's Financial Capacity Integral in Wage Structure Determination

In a recent decision, the Supreme Court set aside a judgment by the High Court regarding an industrial dispute. The Court emphasized that an employer's financial capacity is crucial when determining employee wage structures.

The case originated from a demand raised by the appellant, the employee union, in 2008 regarding wage revisions and allowances. The Tribunal's award in favor of the employees was challenged in the Bombay High Court, which partially upheld the award.

The employer argued that the High Court exceeded its jurisdiction by re-evaluating evidence and comparing the employer with unsuitable units. They also highlighted their financial difficulties and contested the allowance grants without evidence.

The employee union countered that the High Court had the authority to evaluate facts and make decisions without remanding the case.

The Supreme Court noted previous rulings, highlighting that High Courts can review tribunal awards in certain cases. It reiterated the industry-cum-region test for wage revision, emphasizing the importance of comparing similarly situated units and considering the employer's financial status.

Given the employer's financial situation and the need for further examination of evidence, the Court ruled that the case should be remanded to the Tribunal for reconsideration.

The Court concluded that the High Court's assessment of evidence was flawed, and certain aspects, like overtime wages in allowance calculations, needed re-evaluation.

As a result, both the Tribunal's award and the High Court's judgment were set aside, and the Tribunal was instructed to reconsider the case within six months.

The appellant was represented by Senior Advocate Jamshed P Cama and a team of advocates. The respondents were represented by Senior Advocate Sanjay Singhvi and their legal team.