1989 PLP 554 (PLC)

(2) It is further mutually agreed that the company will grant next annual increment within each worker's wage/salary grade with effect from January, 1985, and thereafter in January, each year. (3) It is further mutually agreed that the agreement dated 16‑3‑1982 shall stand modified to the extent covered by this agreement and shall remain met operative until the expiry of the date mentioned hereunder. (4) It is mutually agreed that the company will increase the present rate of conveyance allowance by Rs.20 (rupees twenty only) per month. Other terms of its administration will remain unchanged." The last para with regard to duration of agreement, is reproduced as under:‑ "Duration of the agreement.‑‑ It is mutually agreed that this, agreement will remain operative and binding until 1st December, 198‑

5. The parties of this agreement undertake not to raise any demand of financial nature directly or indirectly during the period aforesaid."

4. Under the amending Act, subsection (6) was added to section 3 of the Employees' Cost of Living (Relief) Act, 1973, whereby every employee whose wages do not exceed Rs.1,500 shall, in respect of his employment on or after the first day of July, 1985, be paid by his employer an increase in wages at the rate o 13.5% of the Wages. The proviso to subsection (6) reads, as under:‑ Provided that the said increase in wages shall be set off‑‑ (a) against the amount payable as a relief due to rise in the cost of living under an agreement or settlement reached, or an award given, under the Industrial Relations Ordinance, 1969 (XX III of 1969) which has been announced and become effective on or after the first day of January, 1984; and (b) against the amount payable under an agreement or settlement reached and in force on the first day of July, 1985, under which employees get increases at regular intervals on the basis of a rise in the cost of living Provided further that the provision of section 7 shall not apply to the increase in wages payable under this subsection. The plain reading of this proviso would show that the increase in wages can be set‑off against the amount payable under an agreement as the relief under agreement has been awarded due to rise in the cost of living. Relevant terms of the agreement have been reproduced above. It is contended by Mr. All Ahmed, the learned Advocate for the applicant that nowhere in agreement, it is mentioned that the increase in wages have been made due to rise in the cost of living, but, the short recital of the case would show that the increase in the wages and allowances was agreed to by the respondents in consideration of maintaining industrial peace.

6. The respondents had also filed legal objections to the maintainability of the application. It is contended therein that the section 50 of I.R.O. 1969, has a limited scope for the interpretation which specifically relates to `any difficulty or doubt' arising as to the interpretation of any provision of the settlement. It is contended that no such difficulty or doubt has arisen. The execution of agreement is not disputed. It is also not disputed that when the workmen demanded increase in the wages under the amended Act, but the respondents invoked the aforesaid proviso to set‑off increase in wages against the increase under the settlement. It may also be pointed that the concluding para. of agreement would show that the applicant had agreed that during the period of agreement, they would, not raise any demand of financial nature directly or indirectly. The question that requires decision is whether in terms of the settlement arrived at between the parties the respondents are entitled to claim set‑off under the aforementioned proviso to subsection (6) read with the concluding para of the agreement.

7. Mr. All Ahmad the learned Advocate has referred to the decision of this Tribunal in Interpretation Applications Nos. KAR‑324, 329, 344 and 384 of 1985, and 34 of 1986, decided by a single Bench, dated 2‑10‑1988, whereby this Tribunal had observed as under:‑ "

8. The benefit for "set‑off' available conjunctively under clause (b) is also not attracted as for its applicability it was obligatory on the part of the employer to show that the amount payable under an agreement or settlement reached and in force on the First day of July, 1985, provided that employees were getting increase at regular intervals on the basis of rise in the cost of living. This could be shown by means of an indexation scheme framed for the purposes of neutralizing the effect of increase in the cost of living which could be compensated by regular payment scheme. Since no such scheme exists in the establishment and hence benefit of Clause (b) is also not available for "set‑off'."

8. Before the order could be announced, the respondents submitted written arguments which have also been perused and considered. They have produced a copy of the Charter of Demands regarding which the aforesaid settlement was arrived at between the parties. In all, there are 6 demands, 3 of which are relevant for the purpose of the decision of this application. Under demand No. 1, the employees demanded Rs.l(X) increase in the basic salary. Under demand No. 2, the dearness allowance was sought to be raised from Rs.210 to Rs.300 and under demand No. 3, the Conveyance Allowance was demanded to be raised from Rs.65 to Rs.100. The terms of agreement arrived at between the parties would show that only demand Nos. 1 and 3 were partly accepted by the respondents. Under the demand No. 1, Rs.30 were increased in the basic salary of the employees and in respect of demand No. 3, the Conveyance Allowance was raised by Rs.20 per month. Demand No. 2 would show that the workers were already getting Dearness Allowance of Rs.210 per month but, no increase in that DA was allowed under the agreement. The charter of demands does not show that the consideration for demands was the increase in the cost of living.

9. The respondents have also stressed upon the sentence in para. 3 relating to short recital of the case which shows that the parties agreed to negotiate an agreement by settling all demands and disputes existing and/or referred/raised by the Union. This sentence would not indicate that the increase in the basic salary or in the conveyance allowance was as a result of the demand No. 2 which relates to increase in the Dearness Allowance. These 2 demands are separate from third demand regarding the increase in the Dearness Allowance and, therefore, increase under these two demands cannot be said to be the consequence of increase in the cost of living.

10. The respondents have also stressed upon the last sentence in the agreement in para. 5 relating to duration of the agreement under which the parties agreed not to raise any demand of financial nature directly or indirectly during the period the agreement was valid. It is a settled law that the parties cannot contract out of Law and any agreement in violation of mandatory provision of Law would be void. Besides this agreement was reached by the parties much before the promulgation of amending Act under which the stipulated increase in cost of living allowance was made compulsorily payable by the employer to the employees. The Law does not contemplate any agreement which would deprive the parties of further rights that may be conferred by any Law upon the party in future. This stipulation also, therefore, would not assist the respondents.

11. It would be seen that two different interpretations are being put upon the relevant clauses of the settlement. The respondents interpreted the agreement in such a way as to entitle them to claim set‑off under the aforesaid proviso to subsection (6); whereas, the applicants interpreted in a manner which does not admit of any such set‑off. Therefore, there can be no doubt the doubt and difficulty has arisen to the interpretation of the settlement which requires interpretation by this Tribunal in exercise of its powers under section 50 of Industrial Relations Ordinance, 1969. As pointed above, the terms of agreement and the nature of charter of demands would clearly show that the increase in the basic salary or the conveyance allowance under the agreement was not due to rise in the cost of living but was merely for consideration to continue industrial peace as spelt out in the settlement itself. As such, the respondents are not entitled to claim set‑off under para. (a) of the aforesaid proviso. The settlement does not show that under the agreement, the employees were to get increase at regular intervals on the basis of rise in the cost of living, but, it only shows that they will get annual increments from 1‑1‑1985, which is usual increase in the pay of the employees and cannot be considered as increase due to rise in the cost of living.

12. In view of the aforesaid discussion, I am of the opinion that the respondents are liable to pay the increase in the wages by way of Cost of Living Allowance in terms of the aforesaid subsection (6) to all the employees specified therein. The application is disposed of in the above terms. M.Y.H./1395/Lb. S Order accordingly.