Full Judgment Text
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PETITIONER:
MD. QASIM LARRY, FACTORY MANAGER, SASAMUSA SUGAR WORKS
Vs.
RESPONDENT:
MUHAMMAD SAMSUDDIN AND ANOTHER
DATE OF JUDGMENT:
24/03/1964
BENCH:
GAJENDRAGADKAR, P.B.
BENCH:
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
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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
JUDGMENT:
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,
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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 res-
pondents 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 unamended
definition of wages, rates of remuneration prescribed by an
award could not be included. In dealing with the question
of construing the unamended 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 Indus-
trial 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
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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
unamended 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.
(3) [1953] 1 L.L.J. 577,
424