ORDER P.B. Sawant, J.
1. The respondent-company M/s. Somaiya Organics (India) Ltd. runs two Units, a Heavy Chemical factory at Barabankey and a Distillery at Captainganj. At the relevant time, the distillery unit employed about 175 workmen (out of them according to the learned Counsel for the appellants, only 125 were regular workmen) and the chemical factory employed 251 workmen. There is no dispute that there is one balance-sheet for both the units though their profit and loss accounts are separate. There is also no dispute that the distillery unit at the relevant time produced between 50,000 and 55,000 Ltrs of rectified spirit daily and the entire product was transferred to the chemical factory to be used there as raw material for production of Acetic Acid and Ethyl Acetate.
2. It appears that the respondent-company, while it was running the distillery unit, had in 1971 purchased the chemical factory in question which was then run in the name of Shankar Distillery and Chemical Works. In the year 1968, the Heavy Chemical and Fertilizer Industries Wage Board had given an award fixing the wages in the Heavy chemical industry. After taking over the chemical factory, the respondent-company on July 28, 1973 entered into a settlement with the workmen of the said factory on the basis of that award. There is no dispute further that some more settlements were entered into with the said workmen on the same basis from time to time.
3. It appears that there was a tripartite settlement in respect of the workmen of the distilleries in the area which was notified on January 8, 1974. It was valid for three years from that date and covered about 35 distilleries in the region.
4. The grievance of the workmen in the present distillery was that their distillery in fact, was a heavy chemical factory and hence they were not bound by the said tripartite settlement. On the other hand, they were entitled to the wages given by the respondent-company to their workmen in the chemical factory. They contented that their distillery so-called was manufacturing rectified spirit which was an industrial alcohol and, therefore, a heavy chemical. Hence the settlements which were being entered into by the respondent-company with the workmen in the chemical factory on the basis of the award given by the Chemical and Fertilizer Industries Wage Board were applicable to them as well. They also contended that there was admittedly a unity of ownership. There was also a functional unity between the distillery and the chemical factory since the entire product of the distillery was being used as a captive production by the chemical factory, as its raw material. Hence, they raised the industrial dispute to that effect on June 17, 1974 and eventually, the Government made a reference to the Industrial Tribunal on February 20, 1975. The terms of the reference read as follows:
Whether the employer should pay to the employees in Captainganj Distillery, Deoria, U.P., the same wages as were brought into effect in M/s. Somaiya Organics (India) Ltd. by virtue of an agreement dated July 28, 1973.
5. Before the Industrial Tribunal, a statement of claim was filed on behalf of the workmen in which it was stated that the workmen of the two units were transferable from one unit to the other and that the distillery unit was manufacturing rectified spirit which, before the transfer to the chemical factory was denatured. The Company filed two statements of reply one on behalf of the distillery and the other on behalf of the chemical factory. As regards the claim of the workmen that the workmen were transferable from one unit to the other, the reply filed on behalf of the distillery unit was silent. However, the reply on behalf of the chemical factory denied the said statement in the following vague terms-
[T]hat the contents of para 7 ... are not admitted as there mentioned.
6. The fact, however, remains that with regard to the nature of the product manufactured at the distillery, there was no denial in either of the written statements. The said fact was not denied by the company even otherwise at any stage.
7. The Tribunal did not record its finding on the question whether the product of the distillery was a heavy chemical or not and answered reference against the workmen on the ground that the two units were distinct and the workmen in the two units were governed by different awards and settlements for a long time.
8. Shri Khera, learned Counsel appearing for the appellant-union, urged various grounds in support of his contention that the workmen in the distillery were entitled to the same wages as paid to those in the chemical factory. We are, however, of the view that it is not necessary to go into all the said grounds, since one ground urged by him, namely, that the distillery in fact, belongs to the heavy chemical industry has no satisfactory answer from the respondent-Company. The Heavy Chemical and Fertilizer Industries Wage Board in its award has described rectified spirit as a heavy chemical. The Board in paragraph 3.2 of its report has also referred in this connection to the opinion of the Directorate-General of Technical Development, Government of India, according to which "any basic chemical produced in large quantities and in commercial quality as distinct from C.P. or B.P. quality may be termed a heavy chemical". The Board has further stated that the criteria to be specified for material to be called heavy chemical are the following:
(1) It should be a basic chemical for use as a raw material or essential material for other industries.
(2) It should be produced in bulk or in large tonnages.
(3) It should be low in price as the development of other industries depends on the cheap availability of this chemical.
(4) It should be of technical grade and need not be manufactured in a high state of purity.
A particular industry may be considered as a Heavy Chemical Industry if it makes large tonnages of a technical grade basic chemical at low price for use as a raw material or essential material in other industries.
9. In view of the non-controverted fact that the present distillery unit manufactures rectified spirit, the unit according to the above criteria, would belong to the Heavy chemical Industry. However, Mr. Nariman appearing for the respondent-company contended that even according to the opinion given by the Directorate-General of Technical Development, the chemical must be produced in large quantities and according to the Wage Board, it should be produced in bulk, i.e. , in tonnages. According to him, the production of 50 tonnes per day cannot be said to be a production in large quantities. With respect to the learned Counsel, we are unable to agree with him. On the admitted fact that the production per day is atleast 50 tonnes, the annual production of the rectified spirit will be no less than 12,500 tonnes. We are, therefore, of the view that the distillery unit properly belongs to the heavy chemical industry and not to the distillery industry which produces potable alcohol and is covered by the tripartite settlement of January 8, 1974.
10. Mr. Nariman then contended that the tripartite settlement relating to the distillery industry was in operation in the present distillery unit from January 8, 1974 till January 7, 1977. During this period, it was not open for the appellant-union to raise an industrial dispute. Since the dispute was raised during the operation of the said settlement the reference of the dispute is itself illegal. In the view we have taken, namely that the present distillery properly belongs to the heavy chemical industry and not to the distillery industry, the said settlement did not cover the workmen in question and hence it did not come in their way in raising the present industrial dispute. Hence, this contention must also fail.
11. Mr. Nariman lastly contended that the said settlement was never disowned by the appellant. The conduct of the workmen itself negatives this contention. The settlement was notified on January 8, 1974 and within about six months thereafter the present dispute was raised on the ground that the workmen were properly covered by the settlement which the Management had entered into with the workmen of the chemical factory. We are, therefore, unable to appreciate this contention either.
12. Hence, we are of the view that the Tribunal erred in not going into the question regarding the nature of the product manufactured by the distillery and the proper industry to which it belonged. For the reasons given above, we have come to the conclusion that the distillery unit belongs to the heavy chemical industry and hence the workmen are entitled to the same wages as are given to the workmen in the chemical factory at Barabankey. We, therefore set aside the award of the Tribunal and instead answer the reference in favour of the workmen and hold that the workmen of the distillery unit are entitled to the some wages as are paid to the workmen in the Barabankey Chemical Factory under the agreement dated July 28, 1973 entered into by the respondent- company with the workmen in that factory.
13. Appeal is allowed accordingly. The respondents will pay the costs throughout. Since the dispute relates to the year 1975, we direct the respondent-company to make the payment to the workmen concerned on the basis of the agreement in question within four months from today.