Full Judgment Text
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PETITIONER:
CLOTHING FACTORY, NATIONAL WORKERS’ UNIONAVADI, MADRAS, REPR
Vs.
RESPONDENT:
UNION OF INDIA BY ITS SECRETARY, MINISTRY OFDEFENCE, NEW DEL
DATE OF JUDGMENT20/04/1990
BENCH:
AHMADI, A.M. (J)
BENCH:
AHMADI, A.M. (J)
FATHIMA BEEVI, M. (J)
CITATION:
1990 AIR 1383 1990 SCR (2) 617
1990 SCC (3) 50 JT 1990 (2) 231
1990 SCALE (1)798
ACT:
Factories Act, 1948--Section 59 and Presidential Order
dated September 1, 1959 and February 13, 1963--Ordinance
Clothing Factory--Payment of over-time wages for piece rated
workers-Computation of.
HEADNOTE:
The controversy that requires determination in this
appeal is whether piece-rated workers are entitled to over-
time wages for work done beyond the normal hours of 44-3/4
hours and upto 48 hours in a week, i.e. for 3-1/4 hours in a
week and the rate at which they should be paid the overtime
wages for those hours.
The workers of the Clothing Factory are divided into two
categories viz., (i) day workers and (ii) piece-rated work-
ers. Whereas the day workers are paid wages in the scale of
Rs.260-400, on the basis of their actual attendance the
piece-rated workers are paid on actual output or production
calculated on the basis of time required for making the item
at an hourly rate to be arrived at in accordance with the
formula prescribed for the purpose. According to the appel-
lants, the piece-rate system was introduced sometime in 1963
and since then the piece-rate workers were paid overtime
wages accordingly for work done beyond the normal working
hours i.e. 44-3/4 hours (8 hours per day other than Satur-
days when the working hours are 4-3/4 hours), but the same
was abruptly stopped from 1983 so much so that they were
even denied the wage at the normal rate for work done beyond
normal hours and upto 48 hours. Being dissatisfied, the
appellant Union filed a writ petition in the High Court of
Madras praying for a suitable direction to the respondents
to pay the piece-rate workers extra or overtime wages at the
rate prescribed by section 59(1) of the Factories Act if the
total working hours of any workman exceeded 44-3/4 hours in
a week. The learned Single Judge of the High Court by his
order dated 6th December 1983, dismissed the writ petition.
An appeal was preferred by the appellant Union but whilst
the said appeal was yet pending disposal by the High Court,
the appellant Union filed yet another writ
618
petition in the same High Court, which was later transferred
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to the Central Administrative Tribunal and which has been
disposed of by the Tribunal by the impugned order. Hence
this appeal by the Union after obtaining special leave. The
appeal preferred against the order of the learned single
Judge of the High Court was later dismissed for default.
The workers claim that they are entitled to extra wages
for these 3-1/4 hours at double the normal rate in accord-
ance with section 59(1) of the Factories Act whereas the
Union denies such liability.
Dismissing the appeal, this Court,
HELD: There is no dispute that the workers are paid
overtime wages for work done in excess of 9 hours on any day
or 48 hours in any week in accordance with section 59 of the
Factories Act. This section does not provide for overtime
wages for work done in excess of the normal working hours
and upto 48 hours. [624C]
Under the Presidential order of 1st September, 1959,
overtime wage was payable for work in excess of normal
working hours and upto 9 hours on any day or 48 hours in a
week at the rate prescribed in the departmental rules. By
the subsequent Presidential Order of 13th February, 1963,
the method of calculation and payment of overtime wage to
piece workers was outlined. Under these orders the day
workers are allowed overtime wages for working beyond the
normal working hours whereas piece workers are allowed piece
work profits as may be earned by them for working beyond
normal working hours and upto 48 hours in a week. [625A-B]
In the instant case, the grant of overtime wages for the
period in excess of the normal working hours of 44-3/4 per
week and upto 48 hours is governed by the relevant depart-
mental rules and Section 59(1) of the Factories Act comes
into play only if a piece worker has worked beyond 9 hours
in a day or 48 hours in a week and not otherwise. Further,
piece workers are allowed piece work profits as may be
earned by them for working beyond normal working hours and
upto 48 hours in a week. [625G-H]
Union of India v.G.H. Kokil, [1984] Suppl. S.C.C. 196,
distinguished.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1929 of
1990.
619
From the Judgment and Order dated 29.7.1988 of the
Central Administrative Tribunal Madras in Transferred Appli-
cation No. 244 of 1987.
Ambrish Kumar for the Appellant.
Anil Dev Singh, R.B. Misra and Ms. Sushma Suri for the
Respondents.
The Judgment of the Court was delivered by
AHMADI. J. Special leave granted.
The workmen of the Ordinance Clothing Factory, Avadi,
Madras are represented by the petitioner/appellant Union.
The workers of the factory are divided into two categories,
namely, (i) day workers and (ii) piece-rated workers. The
day workers are paid wages in the time scale of Rs.260-400
on the basis of their actual attendance whereas the piece-
rated workers are paid on actual out-put or production
calculated on the basis of time required for making the item
by multiplying the same by the hourly rate worked out by
dividing the mean of the time scale by monthly working hours
e.g., Rs.330 + 195 hours = Rs.1.69 (Rs.330 being the mean of
the time scale of Rs.260-400 and 195 hours being the total
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monthly hours).
The appellant-Union contends that the daily normal
working hours of the workmen are 8 during the week except on
Saturdays when the working hours are 4-3/4 only. Thus the
total working hours during the week comes to 44-3/4 hours.
If the piece-rated workers are required to work beyond the
aforesaid normal working hours they are entitled to overtime
wages under section 59 of the Factories Act, 1948. That
section, in so far as is relevant, reads as under:
"Section 59(1)’--Where a worker works in a factory for more
than nine hours in any day or for more than fortyeight hours
in any week, he shall, in respect of overtime work, be
entitled to wages at the rate of twice his ordinary rate of
wages."
This sub-section postulates payment of extra wages at twice
the ordinary rate of wages for those workers of the factory
who are required to work for more than 9 hours in a day or
for more than 48 hours in a week. The appellant-union filed
a Writ Petition No. 2356 of 1985 in the
620
High Court of Madras praying for an appropriate writ or
direction to the respondents to pay the piece-rated workers
extra or overtime wages at the rate prescribed by section
59(1) if the total working hours of any workman exceeded
44-3/4 hours in a week. The appellant-union contended that
the piece-rate system was introduced sometime in 1963 and
since then the piece-rate workers were paid overtime wages
accordingly for work done beyond the normal working hours
but the same was abruptly discontinued from 1983; so much so
that they were even denied the wage at the normal rate for
work done beyond 44-3/4 hours and upto 48 hours, i.e, 3-1/4
hours. It is, however, admitted that if the workmen are
required to work beyond 48 hours in a week, they are paid
extra wages in accordance with section 59(1) of the Facto-
ries Act. Thus the controversy is in respect of the rate at
which piece-rate workers should be paid wages for the work
put in between 44-3/4 and 48 hours in a week. The workers
claim they are entitled to extra wages for these 3-V4 hours
at double the normal rate in accordance with section 59(1)
of the Factories Act. In support reliance is placed on the
Ministry of Defence letter No. F. 8(5)/56/D(Civ. II) dated
1st September, 1959 which inter alia provides that in all
cases where overtime pay is admissible to civilian person-
nel, both under the provisions of the Factories Act and
Departmental Rules, the overtime pay should be calculated as
under:
(i) For work in excess of normal working hours and upto 9
hours on any day or 48 hours in a week, overtime will be
paid at the rate prescribed in the departmental rules. For
calculation of overtime pay under this item only basic pay
and Dearness allowance shall be taken into account.
(2) For work in excess of 9 hours on any day or 48 hours
in a week overtime will be paid at the rates prescribed in
the Factories Act. For calculating overtime pay under this
item total pay including all allowances will be taken into
account.
By a subsequently communication dated 13th February, 1963
the Ministry clarified that having regard to the revision of
piece work rates effected in the Ordinance Factories co-
relating them to the monthly scales of pay sanctioned by the
Ministry’s letter dated 16th January, 1954, the distinction
between High Paid and Low Paid piece workers stood abolished
and keeping in mind the Ministry’s letter dated 1st Septem-
ber, 1959, the President was pleased to sanction the follow-
ing methods of calculation and payment of overtime to
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piece-rate workers:
621
(i) Piece workers under P & A Regulations Part I 1923. (a)
No overtime will be admissible for working overtime in the
day shift. But for the purposes of distribution of P.W.
profits, the time wages element in respect of overtime upto
9 hours per day or 48 hours a week will be determined at the
rate of P/200 per hours, where ’P’ represents the monthly
basic pay and dearness pay where admissible.
(b) An extra 1/2 hour pay calculated at the hourly rate of
1/200 of the monthly basic pay or the monthly basic pay and
dearness pay, where admissible, for every hour of systematic
overtime worked on the night shifts in addition to their
piece work earnings.
(ii) Piece workers under the Factories Act
For each hour of overtime in excess of 9 hours on any day or
48 hours in a week a piece worker will be 1/200 of the
monthly basic pay plus 25% of basic pay plus twice all
allowances. In other words, if ’P’ represents the monthly
basic pay and ’D’ stands for all allowances such as dearness
allowance, house rent allowance, compensatory (city) allow-
ance, overtime for each hour will be P/200 + 1/4P/200
+2D/200.
This order was directed to take effect from 1st March, 1954.
Thereafter, by a corrigendum issued on 21st October, 1965,
sub-paragraph (1) of the Ministry’s letter of 1st September,
1959 was directed to be substituted w.e.f. 2nd July, 1965 by
the following:
"1. For work in excess of normal working hours and upto 9
hours on any day or 48 hours in a week, overtime will be
paid at the rate prescribed in the departmental rules. For
calculating overtime pay under this item, basic pay, dear-
ness allowance, special pay, personal pay, pension (to the
extent taken into account for the fixation of pay) in the
case of re-employed pensioner and city compensatory allow-
ance shall be taken into account. House Rent Allowance,
conveyance allowance, traveling and daily allowances,
permanent travelling allowance, clothing allowance, uniform
allowance, washing allowance and children education allow-
ance shall not be included."
622
But by a Circular No. 1823/LB dated 2nd February, 1983 it
was stated that orders had since been received from the
Ordinance Factory Board ’to stop payment of Departmental
Overtime when piece workers work beyond normal working hours
and upto 9 hours a day or 48 hours a week’. It was further
clarified that they would be entitled to piece work earnings
only for the period they work extra hours. Thus the payment
of departmental overtime for January, 1983 in February, 1983
was stopped. However, with regard to workmen of the Ordi-
nance Factories and other industrial establishments under
the Defence Ministry governed by the Factories Act, it was
laid down by the communication dated 11th September, 1987
that such workmen shall be entitled to overtime allowance at
time rate for work done in excess of prescribed hours and
upto 48 hours a week, in accordance with Ministry’s O.M.
dated 25th June, 1983, but it was clarified that the time
rate of wages will be calculated with reference to pay in
the revised scale w.e.f. the date the worker has been
brought on the revised scale introduced from 1st January,
1986. In the light of the above, the appellant-union con-
tends that as the prescribed hours of work were 44-3/4 hours
per week, the workmen were entitled to overtime wage or
allowance for work done beyond 44-3/4 hours and upto 48
hours a week at double the ordinary rates, which has been
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wrongly and illegally discontinued.
The case set up by the respondents is that the workers
of the petitioner/appellant-union are mostly doing tailoring
work, stitching uniforms, tents, parachutes, covers etc., in
the Ordinance Clothing Factory, a Govt. of India Undertak-
ing, and are paid wages on piece rate basis. It is submitted
that while fixing the piece work rate the labour involved in
the production of each article is analysed in detail and the
basic time is determined to which 25% incentive is added and
the wage is paid on the basis of time so calculated by
taking the arithmatic mean of the scale to which the worker
belongs and dividing the same by the figure 195 representing
the number of standard hours for a month. Thus if a piece
worker completes his job allotted to him he would earn his
basic time wage plus an extra 25% as incentive. It is fur-
ther stated that the payment of overtime wages for the work
done beyond the normal working hours of 44-3/4 and upto 48
hours in a week is regulated by the Departmental Rules and
for the period exceeding 48 hours in a week or 9 hours on a
single day is regulated as per the requirements of the
Factories Act. According to the respondents the Defence
Ministry letter of 1st September, 1959 as amended by the
corrigendum of 21st October, 1965 does not apply to piece
workers but their case in regard to the grant of overtime
payment is governed by
623
the Defence Ministry letter dated 13th February, 1983 as
amended by the Corrigendum of 18th January, 1970. In fact
the former letters apply to day workers who are paid wages
on the basis of attendance. Thus according to the
respondents piece workers are not entitled to overtime wages
at double the rate for work done in excess of 44-3/4 hours
upto 48 hours in a week because they are entitled to piece
work profit in the form of earning which is included in
their wage structure itself to compensate them for the extra
working hours upto 48 hours in a week. Yet on account of a
mistake such payment was made till December, 1982 but when
it came to light the same was discontinued by the Circular
letter dated 2nd February, 1983. This discontinuance was
challenged in Writ Petition No. 10095/83 in the Madras High
Court which was repelled by Mohan, J. by his order dated 6th
December, 1983. The appeal filed against the decision of
Mohan, J. was still pending in the High Court when the
proceedings giving rise to this appeal were initiated by
this Union. Lastly it is pointed out that according to the
terms of section 59 of the Factories Act, the question of
payment of overtime at double the rate can arise any if the
piece worker has worked for more than 9 hours per day or 48
hours per week and not to cases of the present type. The
respondents, therefore, pray that the present appeal is not
maintainable and deserves to be dismissed.
In the rejoinder filed on behalf of the appellant-union
it is contended that the 25% incentive is not to compensate
for overtime work beyond 44-3/4 hours and upto 48 hours in a
week but is a measure to provide for rest intervals, minor
mechanical breakdowns, tools sharpening or grinding or
hold-ups for want of raw-materials, etc., to arrive at the
operational time for production of an item. The appellant,
therefore, contends that the contention that the letters
dated 1st September, 1959 and 12th October, 1969 applied
only to the monthly-rated day workers is misconceived. This
is apparent from the subsequent letter dated 13th February,
1963 as amended by the corrigendum of 18th January, 1970.
Therefore, according to the appellants, the contention that
piece-work profit is incorporated in the wage structure
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applicable to piece rated workers is not correct and clearly
manifests that the discontinuance of overtime is based on a
wrong understanding of the relevant orders. In support
strong reliance is placed on this Court’s decision in Union
of India v.G.H. Kokil, [1984] Suppl. SCC 196. Lastly it is
contended that the respondents were not justified in abrupt-
ly discontinuing the grant of overtime wages on the pretext
of a so-called ’mistake’ and their action in so doing is
clearly high-handed amounting to unfair labour practice not
expected from a governmental
624
undertaking. It is also contended that the circular letter
of 2nd February, 1983 is a document of doubtful origin and
can not in any case override the prior orders contained in
the letters of the Ministry of Defence earlier referred to.
The appellants, therefore, contend that the impugned deci-
sion needs to be set aside and the overtime payments which
have been unilaterally and arbitrarily discontinued re-
stored.
From the above resume it is clear that the controversy
is limited to the question of non-payment of overtime wages
for work done beyond the normal hours of 44-3/4 hours and
upto 48 hours in a week i.e., for 3-14 hours in a week.
There is no dispute that the workers are paid overtime wages
for work done in excess of 9 hours on any day or 48 hours in
any week in accordance with section 59 of the Factories Act.
This section does not provide for overtime wages for work
done in excess of the normal working hours and upto 48
hours. In Kokil’s case (supra) the point for consideration
was whether the employees working in the factory of the
Indian Security Press, Nasik, were entitled to overtime
wages under section 59 of the Factories Act read with sec-
tion 70 of the Bombay Shops & Establishments Act, 1948, for
the work done beyond the normal working hours. According to
them their normal working hours were 44 per week, they were
required to work in excess thereof but they were paid over-
time wages for the extra hours of work at the basic rates
though they were entitled to overtime wages at double the
normal rate. In that case three contentions were raised,
viz., (i) since none of the respondents was a ’worker’ under
section 2(1) of the Factories Act, their case was not gov-
erned by section 59 of the said Act read with section 70 of
the Bombay Shops & Establishments Act; (ii) assuming the
respondents were entitled to claim the benefit of section 59
read with section 70 as aforesaid even though none of them
was a worker, section 59 became inapplicable by virtue of
Rule 100 made under section 64 of the Factories Act; and
(iii) since none of the respondents was a ’workman’ under
section 2(s) of the Industrial Disputes Act, 1947, the
application under section 33C(2) thereof was not maintain-
able. This Court, on a true interpretation of section 70 of
the Bombay Shops & Establishments Act, came to the conclu-
sion that the non-obstante clause found therein made it
clear that section 59 would apply and the same non-obstante
caluse kept out the application of section 64 read with Rule
100. On the third question this Court confirmed the Labour
Court’s finding that the respondents were workmen under the
Industrial Disputes Act. In this view of the matter this
Court held that the employees were entitled to overtime
wages under section 59 of the Factories Act.
625
Now under the Presidential order of 1st September, 1959
overtime wage was payable ’for work in excess of normal
working hours and upto 9 hours on any day or 48 hours in a
week’ at the rate prescribed in the departmental rules. By
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the subsequent Presidential order of 13th February, 1963 the
method of calculation and payment of overtime wage to piece
workers was outlined. Under these orders the day workers are
allowed overtime wages for working beyond the normal working
hours whereas piece workers are allowed piece work profits
as may be earned by them for working beyond normal working
hours and upto 48 hours in a week. This is clear from clause
(i) of the letter dated 13th February, 1963. Even the Manual
of Cost Accounting (1986) meant for Ordinance and Ordinance
Equipment Factories indicates that in the case of piece
workers no separate payment for overtime is permissible
under the departmental rules for day shift workers but they
are entitled to piece work earnings only. That is why in the
earlier Writ Petition No. 10095 of 1983 filed in the Madras
High Court a contention was based on Article 14 of the
Constitution that the management was guilty of discrimina-
tion inasmuch as day workers of day shifts were entitled to
overtime wages whereas piece workers were denied the same.
The contention was turned down by Mohan, J. whose decision
was challenged in appeal before the High Court which appeal
has since been dismissed for default. It is indeed surpris-
ing why another Writ Petition No. 2356 of 1985 was filed in
the same High Court, notwithstanding the pendency of the
said appeal, which writ petition on transfer to the Central
Administrative Tribunal came to be disposed of by the im-
pugned judgment and order. In fact it is doubtful if this
second Writ Petition would have been entertained in view of
the earlier decision of Mohan, J. rendered several years
back soon after the discontinuance of grant of overtime by
the circular letter of 2nd February, 1983 merely because a
different union was espousing the cause, since the cause was
identical. The decision of this Court in Kokil’s case is
clearly distinguishable on facts. 1n that case there was no
dispute that if section 59 of the Factories Act applied the
workers were entitled to overtime wages for work done beyond
the normal hours and upto 48 hours. That would naturally
depend on the relevant service rules since section 59 stric-
to sensu applies to cases of overtime work done beyond 9
hours a day or 48 hours a week. In the present case the
grant of overtime wages for the period in excess of the
normal working hours of 44-3/4 per week and upto 48 hours is
governed by the relevant departmental rules and section
59(.1) of the Factories Act comes into play only if a piece
worker has worked beyond 9 hours in a day or 48 hours in a
week and not otherwise. Further, piece workers are denied
overtime wage for these 3-1/4 hours of work in a week
626
because this factor is taken care of in the calculation of
the piece rate. We are, therefore, of the opinion that the
ratio of Kokil’s case has no application to the facts of the
present case.
For the above reasons we see no merit in this appeal.
The appeal, therefore, fails and is dismissed. No order as
to costs.
Y. Lal Appeal dis-
missed.
627