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Application No. KAR‑574 of 1982, heard on 18th April, 1983.

‑‑‑S. 3 (5) [as inserted by Employees Cost of Living (Relief) (Amend ment) Ordinance (XXV of 1981)]‑Set‑off against increases under settlement‑Settlement arrived at after protracted negotiations and conciliation proceedings providing increase in basic wages and con veyance allowance to all workers‑No direct or circumstanital evi dence to establish positively or even impliedly that such increases were to provide relief against rise in cost of living‑Presumption, in circumstances, held, would appear that issue of rise in cost of living apparently did not figure in negotiations‑Mere fact that there bad been a large increase and no reason therefor specifically mentioned, held, not sufficient for inference that increases must have been on account of rise in cost of living‑In absence of any tangible evidence it cannot be said that increase in wages or allowances given in a settlement must have been on account of rise in cost of living -Benefit of ambiguity to be given to employees and employer, in circumstances, held, not entitled to benefit of set‑of.

Prince Glass Works Limited v. Workers' Welfare Union 1982 P L C 984 ref.

Azad Friends & Company Limited v. Employees' Union 1982 P L C 825 and New Jubilee Insurance Company Limited v. District Judge, Karachi, 1981 P L C 566 rel.

‑‑S. 3 (5) [as inserted by Employees' Cost of Living (Relief) (Amendment) Ordinance (XXV of 1981)]‑Increase in wages and allowances by settlement‑Set‑off‑Settlement reached after date of promulgation of Employees Cost of Living (Relief) (Amendment) Ordinance, 1981 as a result of negotiations commenced much earlier‑Settlement providing that rights enjoyed by workers in the post or in future under any law or rules or Government would not be affected by benefits conferred under the Settlement‑Employer, in circumstances, held, had waived his right to set‑of cost of living allowance admissible under the Ordinance against increases pro vided under the settlement.

New Jubilee Insurance Employees' Union v. Sind Labour Court 1982 P L C 1012 distinguished.

Abid Puri for Appellants.

M. L. Shahani for Respondents.

Date of hearing : l8th April, 1983.

This is an application under section 50, I. R. O., for the interpretation of a settlement arrived at on 13th July, 1981 between the Taj Company Limited, the applicants herein, and the Taj Company Limited Workers' Union, the C. B. A. in the applicant company, which is the respondent herein. The difficulty or the doubt which is said to have arisen in respect of the above settlement and for the interpretation whereof these proceed ings have been taken by the applicant company is that under the settle ment two specific benefits have been conferred upon the workers, the first benefit being an increase in the basic wages of every workman, whether permanent or temporary, of Rs. 45 p. m. with effect from 1st January, 1981, and the second being an increase in the conveyance allowance admis sible to each workman from Rs. 50 p. m. to Rs. 70 p. m., which amounts according to the applicant company are being paid to the workers on account of rise in the cost of living and hence the cost of living allowance payable under Ordinance XXV of 1981 is to be set off against the said amount, but this contention is strongly opposed by the respondent union which claims that these amounts have been agreed to pay in consequence of normal negotiations and collective bargaining process.

2. The settlement arrived at on 13th July, 1981 was in consequence of a charter of demands, dated 1st January, 1981, served upon the applicant company by the respondent union. It appears that the applicant company was not agreeable to accept the charter of demands and hence a strike notice was served by the respondent union upon the applicant company. This was followed by protracted negotiations and conciliation proceedings through the officers of the Directorate of Labour and ultimately a settlement was arrived at on 13th July, 1981. Paragraphs 1, 2, 4 and 5 of the settlement are important and they are reproduced in extenso. They read as follows :‑

It was contended by Mr. Abid Puri, the learned counsel for the applicant company, that though the above settlement does not specifically state that the increase in the basic wages of the workmen or the monthly conveyance allowance admissible to them has been on account of the rise in the cost of living or to provide relief to the workers against the rise in the cost of living nevertheless the circumstances indicate that both the increases are on account of rise in the cost of living. In respect of the increase in the basic wages, he submitted that as this was a special increase, apart from the normal annual or periodic increase, therefore it should be presumed that the increase was on account of rise in the cost of living, specially as no other circumstance for such abnormal increase has been indicated in toe settlement. In support of his contention the learned counsel relied upon the decision of this Tribunal in the case of Prince Glass Works Limited v. Workers' Welfare Union (1982 P L C 984). As regards the con veyance allowance the learned counsel submitted that the increase in the conveyance allowance from Rs. 50 to Rs. 70 p. m. was clearly attribut able to rise in the cost of living and in support of his contention he again relied upon the decision of this Tribunal is the case of Prince Glass Works. 4. Mr. Shahani, the learned counsel for the respondent union, on the other hand, submitted that the claim of the applicant company for setting oft' the cost of living allowance admissible to workers under Ordi nance XXV of 1981 against the increase in the basic wages and the conveyance allowance of workmen under the aforesaid settlement was without substance, as firstly, the said increases were not due to rise in the cost of living or to provide relief to the workers against ‑the rise in the cost of living but due to the normal process of negotiations and collective bargain ing, secondly, that such increases were a regular feature in the applicant company in consequence of the normal bargaining process as is evident from the previous settlements, respectively dated 11th August, 1975, 31st December, 1977 and 4th June, 1979, and thirdly, that in the present settlement as well as in the previous settlements there was a specific provision safeguarding the benefits which were admissible to the workmen under the law and rules of Government from adjustment or set off against the increase in wages or allowances provided under the settlements. In support of his contention the learned counsel relied upon the decision of ‑this Tribunal in the case reported as Azad Friends & Company Limited v. Employees' Union (1982 P L C 825) and the judgment of the Karachi High Court in the case of New Jubilee Insurance Company Limited v. District Judge, Karachi (1981 P )C, C 566).

5. It is an admitted position that the settlement of 13th July, 1981 makes no mention of or reference to the fact that the increase in the basic wages or in the conveyance allowance of the workers has been given to provide them relief to rise in the cost of living or in consequence of such rise. In the case of New Jubilee Insurance Company Limited their Lordships of the High Court while construing the provisions of the explanation to section 8 of the Employees' Cost of Living (Relief) Act, 1973, which explanation is identical with the explanation to subsection (5) of section 3 of the Act, inserted by Ordinance of 1981, observed as follows :‑‑

"We are of the considered view that the Explanation to section 8 does not provide a form to express the nature and purpose of pay ment in a settlement or a document. It merely clarifies that if the employer wants to adjust any allowance, then it should be clearly established that it was specifically paid to provide relief due to rise in cost of living. In such a situation if there is any ambiguity the benefits will be given to the workers and the employer will not be entitled to the benefits of adjustment. If the purpose of granting such increase is not clear from the agreement itself then the Court is empowered to look into the facts and circumstances and also to consider the evidence subject to the rules of evidence to determine the intention of the parties, whether the payment was intended to be made to provide relief due to rise in the cost of living. "

in the instant case, there is neither direct nor any other evidence from which it can be reasonably inferred that the increase in the basic wages or in the cost of living allowance was given to provide relief against the rise in the cost of living. From the mere fact that there has been a large increase in the basic wages and in the conveyance allowance and that no reason for such increase has been specifically mentioned in the settlement, no interference can be drawn that these increases must have been on account of rise in the cost of living or to provide relief to they workmen against rise in the cost of living. As pointed out by their Lordships of the High Court in the case of New Jubilee Insurance Company Limited the rise in wages is demanded due to several reasons which inter alia include rise in the cost of living, increase in the paying capacity of the employer and the rise in the wage structure in the comparable industry. Other circumstance which generates demand for rise in wages and persuade the employer to agree to such demand could be scarcity of skilled labour due to migration of the labour. either outside the country or in other areas of the country, increased profits of the employer, securing by the employer of a big contract or obtaining by him of some special facility or a windfall, understanding with the labour for increased production or increased demand for. or increase in the price of the products of the employer company. There are, thus, many causes for demands of the workers of increase in wages and accepting of such demands by the employer and unless there is tangible evidence in this behalf it cannot be said that the increase in wages of allowances given under a settlement must have been on account of rise in the cost of living. As observed by their Lord ships of the High Court in the case of New Juiblee Insurance Company B' Limited if there is any ambiguity the benefit will be given to the workers and the employer will not be entitled to the benefit of adjustment.

6. Not only there is no direct or even circumstantial evidence tending to establish positively or even impliedly that the increase in the basic wages and the conveyance allowance to the workers was to provide them relief against the rise in cost of living but there is evidence to suggest that these increases were the result of negotiations and collective bargain ing, in which the issue of rise in the cost of living may or may not have played any part whatsoever,. The opening paragraph of the settlement of 1981 indicates that the respondent union had served a charter of demands on the applicant company as early as on 1st January, 1981. As the company did not agree to these demands, the respondent union gave a notice of strike and in consequence thereof there were first negotiations and then conciliation proceedings through the officers of the Directorate of Labour. Ultimately, through these conciliation proceedings, a settle ment was arrived at on 13th July, 1981. These recitals in the opening paragraph of the settlement seem to indicate that prolonged negotiations took place between the parties and the settlement was the result of the collective bargaining process and the good offices of the Conciliation Officer. 1f in these conciliation proceedings the question of rise in the cost of living had been raised or the increases in the wages and allow ances were conceded by the employer by reason of such rise, it should not have been difficult for the applicant company to lead evidence either of its own officers or the officers of the Labour Department through whose good offices the settlement had been arrived at. Since no such evidence has been led the presumption would appear to be that the issue of rise C in the cost of living apparently did not figure in the negotiations between the parties or at least the increase in the wages and allowances was not on account of such rise.

7. There is another substantial ground for the view that the applicant company is not entitled to set off the cost of living allowance payable to workers under Ordinance XXV of 1981 against the increase in wages and conveyance allowance. granted to workers under the settle ment. The settlement, while dealing with demand No. 4 of the workers, expressly provides that the rights enjoyed by the workers in the past or in the future under any law or any rule of the Government would not be affected by the benefits conferred upon them under the settlement. It may be mentioned that similar provision has been made in the three earlier settlements, which have been brought on record, namely the settlements, dated 11^th August, 1975, 31st December, 1977 and 4th June, 1979. Mr. Abid Puri, however, sought to . explain away these provisions in the settlement on two grounds. His first ground was that the settlement of 1981 specifically provides that the cost of living allowance of Rs. 40 allowed to the workers under the 1980 orders of Government would not be liable to set off against the increase in the emoluments of the workers under the settlement and that if the intention had been that similarly the cost of living allowance admissible to the workers under Ordinance XXV of 1980 would not be subject to set off against the increase in wages of workers and the allowances admissible under the settlement of 1981 similar provision in regard to Ordinance XXV of 1981 would have been made. This argument overlooks the fact that the charter of demands was served upon the applicant company by the respondent union on 1st January, 1981 long before Ordinance XXV of 1981 was promulgated and hence no reference to the said Ordinance obviously could be made in the charter of demands. The settlement was dealing with the charter of demands of the workers and hence no reference to the Ordinance of 1981 was considered necessary specially as the immediately proceeding clause in the settlement was all embracing and safeguarded the rights of the workers conferred upon them upon the previous and future laws and rules of Government. The second ground on which Mr. Abid Puri sought to explain away the clause in the settlement safeguarding the past and future rights of the workers under the laws and rules of the Government was that the right to receive the cost of living allowance under Ordinance XXV of 1981 was neither a past right nor future right and hence the clause in question in the settlement did not safeguard this right. I regret that I see no force in this argument. The workers clearly had a right under Ordinance XXV of 1981 to receive the cost of living allowance of Rs. 40 p. m. with effect from 1st July, 1981. This right was clearly covered by the exemption a clause in the settlement and the employer by agreeing to the said exemption clause in the settlement waived his right to set off the said allowance against the increase in wages and conveyance allowance of the workers. Mr. Abid Puri, however, submitted that no waiver was permissible in the instant case and he sought support for his contention on the observations of the High Court in the case of New Jubilee Insurance Employees' Union v. Sind Labour Court (1982 P L C 1012). The said observation appears at page 1022 of the report and reads as follows :‑

"(7) Reverting to Mr. Ali Amjad's contention that respondent No. 2 by virtue of clause 17 of the settlement had waived their right to claim a set‑off in respect of other items, than the item provided for in clause I of the settlement, it may be observed that the conclusion arrived at by the learned respondent No. 1 seems to be in consonance with law as there cannot be any waiver to a right which does not exist. In order to constitute a waiver in law inter alia the following ingredients must be present.

(i) That the right should exist;

(ii) the person in whose favour the right exists should have the know ledge of such right ;

(iii) that he consciously waives such right ; and

( iv) that waiver does not violate any law.

In the instant case it is an admitted position that at the time of the execution the settlement, subsection (4) to section 3 of the Act was not even enacted with its proviso entitling respondent No. 2 to claim any set off."

A bare perusal of the above paragraph makes it clear that the facts of the reported case are wholly different from those of the present case. In the reported case, the law conferring the rights which the employer was alleged to have waived had not been promulgated and hence there was no question of the employer waiving such right as he was not even aware of the existence of his rights. In the instant case admittedly Ordinance XXV of 1981 was promulgated on 25th June, 1981 and, therefore, very much on the statute book when the settlement of 13th July, 1981 was reached between the parties. The applicant company was, therefore, fully aware of its rights under the said Ordinance when it agreed to the exemption clause. As I construe the said clause the applicant company had clearly l waived its right to set‑off the cost of living allowance admissible to workers under Ordinance XXV of 1981 against the increase in the basic wages of workers and the conveyance allowance admissible to them under the Settle ment of 1981.

A. E. Appeal dismissed.

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