ORDER K.N. Seth, J. - The petitioner is a private limited company engaged in the manufacture of handloom cloth and fabrics. The workmen of the company made a demand for dearness allowance in addition to the wages they were being paid. The dispute was espoused by the Webbing and Belting, Karamchari Sangh, Ghaziabad on behalf of the workmen of the petitioner company. The State Government, by an order dated April 25, 1972, referred the dispute for adjudication to the Industrial Tribunal (I) Uttar Pradesh. The Tribunal gave an award dated August 26, 1972, which was published in the U.P. Gazette dated October 14, 1972, granting to every workman of the concern earning a salary/wage up to Rs. 1,000/- per month, a basic dearness allowance of Rupees 25/- per month with effect from April 1, 1971. It was further directed that the aforesaid dearness allowance will be linked with the Kanpur "Cost of Living index and regulated at the rate of ten paise per point of rise or fall, provided that the basic dearness allowance of Rs. 25/- per month remains unaffected. The validity of the award has been challenged through this petition. 2. In the year 1964 the workmen of the petitioner company raised a dispute regarding wages and dearness allowance which was referred to the Industrial Tribunal for adjudication. The Tribunal gave an award dated April 29, 1964 granting consolidated wages including dearness allowance. In 1967 the workmen again raised an industrial dispute for additional dearness allowance. The said dispute was also referred to the Industrial Tribunal which rejected the claim of the workmen by its award dated November 23, 1968. From the award of 1968 it appears that the Tribunal arrived at the conclusion that the financial position of the company did not permit grant of any more dearness allowance. In 1970 the workmen moved the Conciliation Officer for constituting a Conciliation Board to settle the industrial dispute between the parties in respect of revision of rates of wages and grant of dearness allowance linked with the Cost of Living Index. A Conciliation Board was constituted. The dispute was, however amicably settled and a document dated 30th April, 1970 was executed by the parties incorporating the terms of the agreement. A Conciliation Board was constituted. The dispute was, however amicably settled and a document dated 30th April, 1970 was executed by the parties incorporating the terms of the agreement. It appears that in June 1971 the workmen presented a charter of demand to the petitioner company with regard to payment of dearness allowance which was ultimately referred to the Tribunal for adjudication resulting in the impugned award. 3. A perusal of the award indicates that some preliminary objections were raised by the petitioner company before the Tribunal which were negatived by it. As those objections have not been raised before me in arguments, they may be taken to have been waived. 4. The first contention raised by the petitioner is that the award is illegal as the Tribunal failed to take into account the industry-cum-region formula which is the basis for fixing wages and dearness allowance. It committed a patent error in granting the dearness allowance on the basis of the financial position of the company and the rise in the Price Index between 1964 and 1971. It appears from the award that the Tribunal was conscious of the principle that in the matter of fixation of wages, dearness allowance etc., the question should be examined on industry-cum-region basis. The Tribunal, however, observed that there was no handloom undertaking at Ghaziabad or in the region of a comparable size. The only existing factory at Ghaziabad, the ALPS, was a very small unit and not comparable to the petitioner company. On this ground it felt justified in looking into the circumstances of the concern itself and the rise in the Price Index for determining the amount I of dearness allowance. The approach by the Tribunal does not appear to be legally sustainable. It is well settled that the basis of fixation of wages and dearness allowance is industry-cum-region. If there are a number of industrial concerns of the same kind in the same region, greater emphasis is laid on the industry part of the industry-cum-region principle. Where, however, the number of comparable concerns is small in a particular region, the region part of the industry-cum-region formula assumes greater importance and, therefore, in fixing wage scales and dearness allowance it becomes necessary to make comparison with different lines of business in the region. As observed by the Supreme Court in Greaves Cotton and Co. Where, however, the number of comparable concerns is small in a particular region, the region part of the industry-cum-region formula assumes greater importance and, therefore, in fixing wage scales and dearness allowance it becomes necessary to make comparison with different lines of business in the region. As observed by the Supreme Court in Greaves Cotton and Co. Ltd. v. Their Workmen, (1964) 1 Lab LJ 342 : ( AIR 1964 SC 689 ): "....... in applying the industry-cum- region formula for fixing wage scales the tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry; in such a case in order that production cost may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind. But where the number of industries of the same kind in a particular region is small, it is the region part of the industry-cum-region formula which assumes importance .............................." In the present case it appears that after coming to the conclusion that there was no handloom undertaking at Ghaziabad or in the region, the Tribunal totally ignored the principle that in such a situation comparison should be made with units doing different lines of business in the region as laid down in (1964) 1 Lab LJ 342 : ( AIR 1964 SC 689 ) (supra). The capacity of the concern to pay is certainly one of the essential circumstances to be taken into consideration but as observed in Express Newspaper v. Union of India, AIR 1958 SC 578 the capacity to pay is to be considered on an industry-cum-region basis after taking a fair cross section of the industry. There may not be an exactly comparable unit in Ghaziabad, but it has not been disputed that there are a number of similar concerns in Meerut, Modinagar and other adjoining areas. It is also not disputed that there are a number of other industrial units in and around Ghaziabad and a comparison of the wages and dearness allowance paid by them would have furnished a better and safer guide for the Tribunal in fixing the dearness allowance for the employees of the petitioner company. It is also not disputed that there are a number of other industrial units in and around Ghaziabad and a comparison of the wages and dearness allowance paid by them would have furnished a better and safer guide for the Tribunal in fixing the dearness allowance for the employees of the petitioner company. To ignore the dearness allowance paid by other industrial concerns in the region may create serious problem of labour unrest. If the dearness allowance payable by a particular concern is fixed at a rate which is much higher than the rate of dearness allowance paid by other concerns, in the region, it is likely to spark off industrial unrest in the region and in order to avoid such a situation the courts have laid emphasis on the region basis of the industry-cum-region formula. The Tribunal totally ignored to take into consideration the region basis of the formula which renders the award illegal and valid. 5. In this connection another point urged by the petitioner may be considered, in determining the amount of dearness allowance the Tribunal took into consideration the financial position of the concern as it has developed since 1964. It also took into account the rise in the Price Index between 1964 and 1971 which according to the Tribunal was to the extent of 278 points or nearly 43 per cent. It has been contended that the Tribunal erred in ignoring the award of 1968 and the agreement arrived at between the parties in 1970. It was pointed out that in its award of 1968 the Tribunal had arrived at the conclusion that the consolidated wages fixed in 1964 remained reasonable in 1968 and, therefore, in the present case the Tribunal could take the difference or the rise in the Price Index between 1968 and 1971. The relevant portions of the award dated 23-11-1968, which have been set out in the impugned award, indicate that the Tribunal rejected the claim of the workmen principally on the ground that the profitability of the company was on a decline and the company had been facing competition in the market with no scope to further increase in the price. In view' of these circumstances it was found that the company was not in a position to absolve the burden of any additional dearness allowance. In view' of these circumstances it was found that the company was not in a position to absolve the burden of any additional dearness allowance. The situation at the time of making the award dated 23-11-1968 could not furnish the basis for determining the claim made in 1971. There is no dispute that between 1964 and 1968 the Price Index had gone up considerably but the demand put forward by the workmen was negatived on the ground of the financial inability of the company to meet the burden of additional dearness allowance. The Tribunal was, therefore, justified in not taking into account the Price Index prevailing on the date of the award of 1968. 6. The grievance of the petitioner with regard to the omission on the part of the Tribunal to take into account the agreement arrived at between the parties in 1970 stands on a better footing. The agreement dated 30th April, 1970 (Annexure `A' to the counter affidavit) indicates that a dispute had arisen between the parties with regard to the wages, grade and dearness allowance payable to the workmen. Before the Conciliation Board thy parties arrived at a settlement which has been incorporated in the aforesaid document. The relevant terms of the agreement are: that the employees would be entitled to the increased dearness allowance as mentioned in the Schedule with effect from 1-6-1970; that the employers have agreed to pay the increased dearness allowance on the basis that the said increase would be in full and final satisfaction of all the claims made by the workmen; that except for the workmen mentioned in the Schedule the workers' union does not press the claim of other workmen of the Company as they were deriving benefit from the incentive scheme introduced by the company; that the workmen undertake not to make any demand which may put financial burden on the company for one year from the date of the agreement. The fact that such an agreement was arrived at between the parties has been specifically admitted in the counter affidavit. There appears to be considerable force in the stand taken by the petitioner company that the Tribunal could not ignore the terms of the agreement and the benefits that accrued to the workmen in fixing the amount of dearness allowance. The fact that such an agreement was arrived at between the parties has been specifically admitted in the counter affidavit. There appears to be considerable force in the stand taken by the petitioner company that the Tribunal could not ignore the terms of the agreement and the benefits that accrued to the workmen in fixing the amount of dearness allowance. The basis on which the Tribunal proceeded to determine the amount of dearness allowance payable to the workmen was the difference in the Price Index between 1964 and 1971 and the financial position of the Company. It does not appear to have taken into consideration the agreement arrived at between the parties and that vitiates the award. 7. It was next contended that the Tribunal was not competent to award dearness allowance from a date earlier than the date of reference, and in any case before the demand was actually made by the workmen. From the award it appears that a copy of the demand notice (Ex. VV-2) was received by the petitioner company on 21-6-1971 and a reminder (Ex. W-3) was sent on 5-11-1971 by the Sangh which had also been received by the Company. The award does not indicate on what basis the Tribunal awarded the dearness allowance with effect from April 1, 1971. The learned Counsel for the petitioner submitted that although the Tribunal has a discretion in awarding relief to the workmen with effect from a particular date, but the discretion could not be exercised arbitrarily and the correct principle is to grant the relief from the date when the demand was made. It was also pointed out that under the agreement dated 30th April, 1970, the workmen had undertaken not to make any demand for a period of one year and in view of that agreement no relief could be granted to the workmen for a period prior to 30th April, 1971. Reliance was placed on the case of Jhagrakhand Collieries (Pvt.) Ltd. v. Central Govt. Industrial Tribunal, (1960) 2 Lab LJ 71 (SC) where the Supreme Court set aside the direction issued by the Labour Appellate Tribunal making the award retrospective from 1st November, 1947, when the demand was made for the first time in September 1962. Reliance was placed on the case of Jhagrakhand Collieries (Pvt.) Ltd. v. Central Govt. Industrial Tribunal, (1960) 2 Lab LJ 71 (SC) where the Supreme Court set aside the direction issued by the Labour Appellate Tribunal making the award retrospective from 1st November, 1947, when the demand was made for the first time in September 1962. The reasons which weighed with the Tribunal for fixing April 1, 1971 as the date from which the dearness allowance was made payable to the workmen have not been disclosed in the award and the representative of the workers' union who appeared before me also could not furnish any basis for selecting April 1, 1971 as the effective date. In the circumstances I am inclined to hold that the Tribunal committed a legal error in directing that the dearness allowance at the enhanced rate will be payable with effect from April 1, 1971. 8. Learned Counsel for the petitioner also made two other submissions: (1) that he was not afforded an opportunity by the Tribunal to produce his evidence and his applications were illegally and unjustifiably rejected; and (2) that the Tribunal committed an error with regard to the financial position of the Company. The Tribunal has dealt with the circumstances in which the applications made by employers for production of additional evidence was rejected. I find no substance in the grievance made by the petitioner in this behalf. As regards the finding about the financial position of the petitioner company, the Tribunal formed its opinion on the basis of the Director's report and the statement of Accounts contained in the Annual Reports of the Company. The learned Counsel has failed to satisfy me that any error was committed by the Tribunal in recording the finding about the financial position of the company. 9. As a result of my views expressed in the earlier part of the judgment this petition succeeds and is allowed. The award of the Industrial Tribunal (1) Uttar Pradesh dated August 26, 1972, published in U.P. Gazette dated 14th October, 1972, is quashed. The Tribunal is directed to reconsider the claim of the workmen for dearness allowance in the light of the observations made above. The Tribunal shall permit the parties to adduce additional evidence only on the question which it has to decide as a consequence of this order. The parties are directed to bear their own costs.