Prantiya
Vidhut Mandal Mazdoor Federation Vs. Rajasthan State Electricity Board & Ors [1992]
INSC 116 (23 April 1992)
Kuldip
Singh (J) Kuldip Singh (J) Yogeshwar Dayal (J)
CITATION:
1992 AIR 1737 1992 SCR (2) 757 1992 SCC (2) 723 JT 1992 (3) 51 1992 SCALE
(1)922
ACT:
Employee's
Provident Funds and Miscellaneous Provisions Act, 1952 Sections 2(b) and
6-``Basic wages for the time being payable''-Interpretation of-Award under
Industrial Disputes Act-Gives revised pay scales to employees with
retrospective effect-Arrears of wages paid to employees-Provident fund-
Contribution-Employees liability to pay-Deduction from wage arrears of
employees-Whether arises.
HEAD NOTE:
A
dispute regarding wages and other conditions of serv- ice arose between the
State Electricity Board-Respondent No.1, and its workmen. The parties arrived
at a settlement as a result of which the dispute was referred to the arbi- trators
under the Industrial Disputes Act.
The
arbitrators entered upon the reference and gave an award dated May 20, 1980, according to which various catego-
ries of workmen were to be paid higher wages with effect from April 1, 1980. The arrears of pay and other
benefits accrued to the workmen were to be paid in four equal instal- ment. The
first instalment was payable on December 1, 1985 and the remaining three at an interval of six months each.
The
Provident Fund authorities issued directions that the provident fund
contributions be deducted from the ar- rears paid to the workmen. Accordingly,
when the first instalment was disbursed, the Board deducted the employees
contribution and also made its own contribution as required under the Provident
Fund Act. However, at the time of the second instalment, the Board filed a Writ
Petition under Article 226 challenging the directions of the Provident Fund
authorities, contending that arrears payable to the employ- ees as a result of
the award of the arbitrators were not the ``basic wages'' under section 2(b) of
the Provident Fund Act.
758 A
single Judge of the High Court dismissed the Writ Petition, but on appeal a
Division Bench set aside the judgement and allowed the Writ petition, holding
that the contribution is to be paid on wages `for the time being payable to the
employees' and not on wages, the payment of which, even at a future date, is
undecided and does not arise out of the contract of employment, and that wages
payable under an award of the arbitrators cannot be termed as deferred wages so
as to mean that they had accrued at a particular time but were payable at a
later date according to the terms of the contract.
Two
appeals were filed against the judgement of the Division Bench to this Court,
one by the Regional Provident Fund Commissioner and the other by the workmen of
the Board.
Allowing
the appeals, and setting aside the judgement of the Division Bench, this Court,
HELD:
1.(i) The expression ``basic wages for the time being payable to each of the
employees'' under section 6 of the Industrial Disputes Act means the basic
wages at the relevant time. When the existing pay-scales are revised with
effect from the back-date, then the revised-wages posterior to that date are
the ``basic wages for the time being pay- able''. The High Court fell into
error in giving a strained interpretation to the provisions of the Provident
Fund and Miscellaneous Provisions Act. [764 C] 1.(ii) When the original
emoluments earned by an employ- ee were ``basic wages'' under the Provident
Fund Act, the substituted emoluments as a result of the award are to be
regarded as``basic wages''.[763 E]
2.
When an award gives revised pay-scales, the employees become entitled to the
revised emoluments and where the said revision is with the retrospective
effect, the arrears paid to employees, as a consequence, are the emoluments
earned by them while on duty. [763 C]
3. The
reference to the arbitration, the acceptance of the award by the parties and
the resultant wage increase with retrospective effect are the direct
consequences of the settlement between the workmen and the Board. Revision of wage
structure as a result of an award under the Industrial Disputes Act, has to be
taken as a part of the contract of employment in the context of the Provident
Fund and Miscel- laneous 759 Provisions Act. [763 E] Harihar Polyfibres v. The
Regional Director ESI Corpora- tion, [1985]1 SCR, referred to.
4. The
workmen have inherent right to collective bar- gaining under the Industrial
Disputes Act. The demands raised by the workmen through their unions are
decided by conciliation, settlement or adjudication under the Act.
These
are time-consuming proceedings. When ultimately the dispute is settled/decided
in workers' favour, the accrued benefit may be made available to them from a
back date. [764 A] In the instant case, the award given in the year 1985 has been
made operative from April
1, 1980. It would be
in conformity with the objects of the Provident Fund and Mis- cellaneous
Provisions Act, which is a social welfare legis- lation, to hold that the
revised pay-scales have become part of the contract of employment with effect
from April 1, 1980. [764 B]
CIVIL
APPELLATE JURISDICTION : Civil Appeal No. 1790 of 1992.
From
the Judgement and Order dated 30.6.1987 of the Rajasthan High Court in D.B.
Special Appeal (Writ) No.305 of 1986.
A.K. Goel
for the Appellant. Vijay Bahuguna, V.C. Mahajan, S.K. Jain, Ms.Sushma Suri and Ms.C.K.
Sucharita for the Respondents.
The Judgement
of the Court was delivered by KULDIP SINGH, J. Special leave granted.
The
question for our consideration in these appeals is whether arrears of wages, as
result of wage-increase-award under the Industrial Disputes Act, 1947(The Act),
would come within the definition of ``basic wages'' under Section 2(b) of the
Provident Fund and Miscellaneous Provisions Act, 1952(The Fund Act).
A
dispute regarding wages and other conditions of serv- ice arose between the
Rajasthan State Electricity Board (The board) and its workmen. The parties
arrived at a settlement as result of which the 760 dispute was referred to the
arbitrators under the Act. The arbitrators entered upon the reference and gave
an award dated May 20,
1985. The relevant
part of the award is re- produced as under:- ``The matters in dispute (terms of
reference) are as under:- (1) Wages increase :
(a)
What should be the Minimum wages for regular unskilled workmen of Rajasthan
State Electricity board in pay Scales No.1 with effect from April 1, 1980 ? (b) What should be the wages
structure of different categories of workmen of Rajasthan State Electricity
Board covered under pay scale Nos.1 to 6 with effect from April 1, 1980 ? Decisions on matters in dispute
(terms of reference) After hearing the arguments on behalf of the parties and
considering the documents supplied by them, and taking into account other rele-
vant matters, our decisions on the matters in dispute are given below:- The
minimum wages for regular unskilled work- men of RSEB in pay scale No.1 with
effect from 1st April, 1980 shall be Rs.400 (Four hundred only) with NIL
Dearness Allowance or any other addition to wages in the nature of Dearness
Allowance, henceforth referred to as D.A.
Revised
pay scales: on the basis of minimum basic pay of Rs.400 with NIL DA, Revised
pay scales Nos.1 to 6 shall be as per Annexure-I to this Award with NIL DA with
effect from 1st April, 1980.'' According to the award various categories of
workmen were to be paid higher wages with effect from April 1, 1980.
The
arrears of pay and other benefits accrued to the workmen were to be paid in
four equal instalments. The first in- stalment was payable on December 1, 1985 and the remaining three at an
interval of six months each. The Provident Fund authorities issued directions
that provident fund contribu- tions be deducted from the arrears paid to
workmen. Accord- ingly when the first instalment was disbursed 761 the Board
deducted the employees contribution and also made its own contributions as
required under the Fund Act. Howev- er, at the time of the second instalment,
the Board filed a writ petition under Article 226 of the Constitution of India
before the Rajasthan High Court challenging the directions of the Provident
Fund authorities on the ground that arrears payable to the employees as a
result of the award of the arbitrators were not the ``basic wages'' under
Section 2(b) of the Fund Act. A learned Single Judge of the High Court
dismissed the writ petition. On appeal, a Division Bench of the High Court set
aside the judgement of the learned Single Judge and allowed the writ petition
on the following reason- ing:- "If a contract of employment provides for
payment of wages at a future date then it may fall within the definition of
wages as the same becomes payable under the contract of employment, wages
payable under some statute or payable under orders of a Court cannot be said to
be wages payable under a contract of employment. The Scheme framed under
Section 6 of the P.F. Act provides for calculation of the contribution on basis
of the emoluments actually drawn during a whole month. The employer has to
submit a consolidated statement of the employees who are members of the fund
along with their basic wages and this return is to be submit- ted within a
prescribed time. If subsequently there is a change in the basic wages then
there is no provision in the scheme for preparing an amended statement. The
contribution recovered from the employees has to be entered every month by the
employer in the contribution card. A monthly entry once made will have to
remain there unchanged.
Unless
there is a specific provision in the scheme for payment of contribution to the
fund, the same cannot be said to be payable by implication.
Contribution
is to be paid on wages 'for the time being payable to the employees' and not on
wages, the payment of which, even at a future date, is undecided and does not
arise out of the contract of employment. Wages payable under an award of the
arbitrators cannot be termed as deferred wages so as to mean that they had
accrued at a particular time but were payable at a later date according to the
terms of the contract. It has also not been shown that the reference of
disputes to the arbi- trators was under the terms of the employment so as to
include wages 762 Payable under the award into the definition of wages under S.2(b)of
the P.F.Act, wages payable under the award are neither in the nature of incre- ments
payable to an employee nor wages which have remained unpaid due to some
reason".
These
two appeals by the regional Provident Fund Commissioner, Jaipur Rajashtan and
by the workmen of the Board are against the Judgment of the Divi- sion bench of
the High Court.
Sections
2 (b) and 6 of the act which are relevant are reproduced hereunder:- 2(b)
"BASIC WAGES" means all emoluments which are earned by an employee
while on duty or on leave with wages in accordance with the terms of the
contract of employment and which are paid or pay- able in cash to him, but does
not include - (i) cash value of any food concession;
(ii)
any dearness allowance (that is to say, all cash payments by what ever name
called paid to an employee on account of a rise in the cost of liv- ing), house
rent allowance, over-time allowance, bonus, commission or any other similar
allowance payable to the employee in respect of his employ- ment or of work
done in such employments.
(iii) any
presents made by the employer".
(6)
" contributions and matters which may be provided for in scheme;- the
contribution which shall be paid by the employer to the Fund shall be six and a
quarter per cent of the basic wages[dearness allowance and retaining allowance
(if any)] for the time being payable to each of the employees (whether employed
by him directly or by or through a contractor) and the employees' contri- butions
shall be equal to the contribution payable by the employer in respect of him
and may, if any employee so desires and if the scheme makes provi- sion
therefore, be an amount not exceeding eight and one-third per cent of his basic
wages(dearness allowance and retaining allowance (if any)....." 763
Reading the above quoted two sections together the expression "basic wages"
means:- (i) All emoluments which are earned by an employee while on duty or on
leave;
(ii) with
wages in accordance with the terms of the contract of employment;
(iii) which
are paid or payable in cash; and (iv) are payable for the time being to each of
the employees.
When
an award gives revised pay-scale the employees become entitled to the revised
emoluments and where the said revision is with retrospective effect, the
arrears paid to the employees, as a consequence, are the emoluments earned by them
while on duty.
We do
not agree with the Division Bench of High court that the wages which are
substituted from back-date as a result of an award under the Act are not the
basic wages as defined under the Fund Act. If the original emoluments earned by
an employee were "basic wages" under the Fund act, there is no
justification to hold that the substituted emoluments as a result of the award
are not the "basic wages". The reference to the arbitration, the
acceptance of the award by the parties and the resultant wage-increase with
retrospective effect, are the direct consequences of the settlement between the
workmen and the Board. We are of the view that revision of wage-structure, as a
result of an award under the Act, has to be taken as a part of the con- tract
of employment in the context of the Fund Act.
This
court in Harihar Polyfibres v. The regional Director ESI Corporation [1985] 1
SCR 712 while dealing with the defini- tion of wages under Employees' State
Insurance Act 1948 held as under:- "Now , under the definition first,
whatever remu- neration is paid or payable to an employee the terms of the
contract of the employment, express or implied is wages; thus if remuneration
is paid in terms of the original contract of employment or in terms of settlement
arrived at between the employer and the employees which by necessary
implication becomes part of the contract of employment it is wages".
764
The workmen have inherent right to collective-bargain- ing under the act. The
demands raised by the workmen through their unions are decided by conciliation,
settlement or adjudication under the Act. These are time-consuming Pro- ceedings.
When ultimately the dispute is settled/decided in workers favour the accrued
-benefit may be made available to them from back-date. This is what has
happened in the present case. The award given in the year 1985 has been made
operative from April 1,1980. Under the circumstances it would
be in conformity with the objects of the Fund Act, which is a social welfare
legislation, to hold that the revised pay-scales have become part of the
contract of employment with effect from April 1,1980.
The
expression" basic wages for the time being payable to each of the
employees" under Section 6 of the Act means the 'basic wages" at the relevant
time. When the existing pay-scales are revised with effect from back-date then
the revised-wages posterior to that date are the "basic wages for the time
being payable". The High Court in our view fell into error in giving a
strained interpretation to the provi- sions of the Fund Act.
We,
therefore, allow the appeals, set aside the judg- ment of the Division bench of
the High court and dismiss the writ petition of the Board with costs. We
quantify the costs as Rs.10000 to be paid to the workmen.
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