Md. Qasim Larry, Factory Manager,
Sasamusa Sugar Works Vs. Muhammad Samsuddin & ANR [1964] INSC 92 (24 March
1964)
24/03/1964 GAJENDRAGADKAR, P.B.
GAJENDRAGADKAR, P.B.
WANCHOO, K.N.
GUPTA, K.C. DAS
CITATION: 1964 AIR 1699 1964 SCR (7) 419
CITATOR INFO:
RF 1980 SC2181 (76) RF 1981 SC1829 (75) RF
1988 SC2223 (20)
ACT:
Wages-Industrial Dispute-Wages fixed by the
Award-If wages as defined by the Act-Payment of Wages Act, 1936 (IV of 1936),
ss. 2(vi), 15.
HEADNOTE:
In pursuance of an award made by an Industrial
Tribunal fixing the pay of the employees at Rs. 2/2/per day, the management of
the appellant had entered into an agreement with its workmen, that the effect
would be given to the wage structure prescribed by the said award. In spite of
the award and the agreement, the appellant paid its employees only As. -/10/per
day and that led to the present claim made by the respondents under s. 15 of
the Payment of Wages Act. They asked for an order from the payment of wages
authority directing the appellant to pay the said prescribed wages. Against the
respondent's claim it was urged by the appellant that s. 15 of the Act was
inapplicable, because the rates of wages fixed by the award did not fall within
the definition of wages prescribed by s. 2(vi) of the Act.
The authority rejected the appellant's
contention. The appellant then challenged the correctness of the conclusion of
the authority before the High Court under Art. 226 of the Constitution. The
High Court dismissed the writ petition and affirmed the finding of the
authority. It held that s.
15 was applicable to the case, because the
wages prescribed by the award did amount to wages as defined by s. 2(vi) of the
Act. On appeal by Special Leave the appellant contended that before it is held
that the wages prescribed by the award fall under s. 2(vi), it must be shown
that they constitute part of the terms of the contract of employment, either
express of implied.
Held: The argument is not well-founded. When
an award is made and it prescribes a new wage structure, in law the old
contractual wage structure becomes inoperative and its place is taken by the
wage structure prescribed by the award. In a sense, the latter wage structure
must be deemed to be the contract between the parties, because that, in
substance, is the effect of industrial adjudication. The true legal position is
that when industrial disputes are decided by industrial adjudication and awards
are made, the said awards supplant contractual terms in respect of matters
covered by them and are substituted by them. That being so, it is difficult to
hold that the wages prescribed by the award cannot be treated as wages under s.
2(vi) of the Act before it was amended. The amendment has merely clarified what
was included in the unamended definition itself.
South Indian Bank Ltd. v. A. R. Chacko,
A.I.R, 1964 S.C.
1522, referred to.
Jogindra Nath Chatterjee and Sons, V.
Chandreswar Singh, A.I.R., 1951 Cal. 29, inapplicable.
Modern Mills Ltd. v. V. R. Mangalvedhikar,
A.I.R., 1950 Bom.
342 and V. B. Godse, Manager, Prabha Mills
Ltd. v. R. M.
Naick [1953] 1 L.L.J. 577, approved
L/P(D)lSCI-14(a) 420
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 251 of 1963.
Appeal by special leave from the judgment and
order dated March 20, 1957, of the Patna High Court in Civil Revision No. 40 of
1956.
M. C. Setalvad, and R. C. Prasad, for the
appellants.
The respondent did not appear.
March 24, 1964. The Judgment of the Court was
delivered by GAJENDRAGADKAR, C. j.The short question which arises in this appeal
is whether the term "wages" as defined by section 2(vi) of the Payment
of Wages Act, 1936 (No. 4 of 1936) (hereinafter called 'the Act') includes
wages fixed by an award in an industrial dispute between the employer and his
employees. This question has to be answered in the light of the definition
prescribed by s. 2(vi) before it was amended in 1958. The subsequent amendment
expressly provides by s. 2(vi) (a) that any remuneration payable under any
award or settlement between the parties or order of a Court, would be included
in the main definition under s.
2(vi). The point which we have to decide in
the present appeal is whether the remuneration payable under an award was not
already included in the definition of wages before the said definition was
amended. It is common ground that between the appellant, Sasamusa Sugar Works
Ltd., and its workmen, the respondents, an award had been made by an Industrial
Tribunal fixing the pay of the employees at Rs.
2/2/per day, and in pursuance of the said
award, the management of the appellant had entered into an agreement with the
respondents that effect would be given to the wage structure, prescribed by the
said award. This agreement was subsequently published in the Bihar Gazette as a
part of the award. In spite of the award and the agreement, the appellant paid
its employees only As. / 10 / per day and that led to the present claim made by
the respondents under s. 15 of the Act. The respondents contended before the
payment of wages authority that the refusal of the appellant to pay to them
wages at the rate awarded, in substance, amounted to an illegal deduction from
their wages and on that basis, they asked for an order from the authority
directing the appellant to pay to the respondents the said prescribed wages.
The appellant raised two pleas against the
respondents' claim. It urged that s. 15 of the Act was inapplicable, because
the rates of wages fixed by the award did not fall within the definition of
wages prescribed by s. 2(vi) and it also argue,, that the claim of the
respondents was barred by limitation.
421 The authority has found that s. 2(vi)
includes wages prescribed by the Industrial Tribunal, and so, it has rejected
the appellants' contention that the applications made by the respondents were
incompetent under s. 15 of the Act. In regard to the question of 'limitation,
the authority did not decide the said question as a preliminary question,
because it held, and, in our opinion, rightly, that it was a mixed question of
fact and law, and so, it had to be tried after recording evidence.
The appellant challenged the correctness of
the conclusion of the authority that the applications made by the respondents
were competent under s. 15 of the Act before the Patna High Court by filing a
petition under Art. 226 of the Constitution. The High Court has affirmed the
finding of the authority and held that s. 15 was applicable to the case,
because the wages prescribed by the award did amount to wages as defined by s.
2(vi) of the Act. On that view, the writ petition filed by the appellant was
dismissed. It is this order which the appellant seeks to challenge before us by
its present appeal by special leave.
Section 2(vi) as it stood at the relevant
time, provides, inter alia, that wages means all remuneration, capable of being
expressed in terms of money, which would, if the terms of the ,contract of
employment, express or implied, were fulfilled, be payable. Mr. Setalvad for
the appellant contends that before it is held that the wages prescribed by the
award fall under s. 2(vi), it must be shown that they constitute part of the
terms -of the contract of employment, either express or implied. The -terms in
question need not be express and can be implied; but they must be terms which
arise out of the contract of employment, and since an award made by an
Industrial Tribunal cannot be said to amount to a contract of employment, the
wage structure prescribed by the award cannot fall within the definition
prescribed by s. 2(vi). That, in brief, is the substance of the argument raised
by the appellant.
We are not inclined to hold that even under
the un amended definition of wages, rates of remuneration prescribed by an
award could not be included. In dealing with the question of construing the un amended
definition of the term "wages", it is essential to bear in mind the
scope and character of the powers conferred on Industrial 'Tribunals when they
deal with industrial disputes under the provisions of the Industrial Disputes
Act. It is now well-settled that unlike ordinary civil courts which are bound
by the terms of contract between the parties when they deal with disputes
arising between them in respect of the said terms, Industrial adjudication is
not bound to uphold the terms of contract between the employer and the
employees. If it is shown to the satisfaction of Industrial adjudication that
the terms of contract of employment, 422 for instance, need to be revised in
the interests of social justice.. it is at liberty to consider the matter, take
into account all relevant factors and if a change or revision of the terms
appears to be justified, it can, and often enough it does, radically change the
terms of the contract of employment. The development of industrial law during
the last decade bears testimony to the fact that on references made under s.
10(1) of the Industrial Disputes Act, terms of employment have constantly been
examined by industrial adjudication and wherever it appeared appropriate to
make changes in them, they have been made in accordance with the
well-recognised principles of fair play and justice to both the parties.
Therefore the basic assumption made by Mr. Setalvad in contending that s. 2(vi)
cannot take in the wages prescribed by the award, is not well founded. When an
award is made and it prescribes a new wage structure, in law the old
contractual wage structure becomes inoperative and its place is taken by the
wage structure prescribed by the award. In a sense, the latter wage structure
must be deemed to be a contract between the parties, because that, in
substance, is the effect of industrial adjudication. The true legal position is
that when industrial disputes are decided by industrial adjudication and awards
are made, the said awards supplant contractual terms in respect of matters
covered by them and are substituted for them. That being so, it is difficult to
accede to the argument that the wages prescribed by the award cannot be treated
as wages under s. 2(vi) of the Act before it was amended. The amendment has
merely clarified what, in our opinion, was included in the un amended
definition itself.
In this connection we may incidentally refer
to the decision of this Court in the South Indian Bank Ltd. v. A. R. Chacko(1),
where it has been observed by this Court that the very purpose for which
industrial adjudication has been given the peculiar authority and right of
making new contracts between employers and workmen makes it reasonable to think
that even though the period of operation of the award and the period for which
it remains binding on the parties may elapse -in respect of both of which
special provisions have been made under sections 23 and 29 respectively-the new
contract would continue to govern the relations between the parties till it is
replaced by another contract. This observation clearly and emphatically bring
out that the terms prescribed by an award, in law, and in substance, constitute
a fresh contract between the parties.
This question appears to have been considered
by the Bombay and the Calcutta High Courts. In Jogendra Nath (1) A.I.R. 1964
S.C. 15.
423 Chatterjee and Sons v. Chandreswar,
Singh(1), the Calcutta High Court appears to have taken the view which supports
Mr. Setalvad's argument, whereas in the Modern Mills Ltd. v. V. R.
Mangalvedhkar(2), and in V. B. Godse, Manager, Prabha Mills Ltd., v. R. M.
Naick, Inspector, under the Payment of Wages Act(3), the Bombay High Court has
interpreted s. 2(vi) to include wages directed to be paid by industrial
adjudication. In our opinion, the Bombay view correctly represents the true
legal position in the matter.
The result is, the appeal fails and is
dismissed. The matter will now go back to the authority under the Act for
disposal in accordance with law. There would be no order as to costs.
Appeal dismissed (1) A.I.R. 1951 Cal. 29. (2)
A.I.R. 1930 Bom. 342.
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