Bombay High Court
M/S Polypharm Pvt. Ltd vs Shri. Rangnath S. Iyer on 7 February, 2017
Author: S.C. Gupte
Bench: S.C. Gupte
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1128 OF 2007
M/s.Polypharma Pvt.Ltd. ...Petitioner
vs.
Shri Rangnath S. Iyer ....Respondent
Mr.Avinash Jalisatgi for Petitioner.
Mr.Arshad Shaikh I/b. Hemant Ingale for Respondent.
CORAM : S.C. GUPTE, J.
ig 7 FEBRUARY 2017
JUDGMENT :
This writ petition, filed under Article 226 of the Constitution of India, challenges an order passed by the Labour Court at Mumbai in an industrial dispute application filed under Section 33-C(2) of the Industrial Disputes Act, 1947 ("ID Act").
2 The Petitioner is a private company limited by shares, engaged in the business of manufacture of laboratory chemicals and fine chemicals. It has factories at (i) Village Saravali, near Bhiwandi and (ii) Thane. Its head office is at Fort, Mumbai. The Respondent was employed at its head office as a secretary-cum-stenographer since 1986. On a reference made to it under the ID Act in 1982 on behalf of workmen at the Petitioner's factories at Saravali and Thane (Reference (ID) No.65 of 1982), the Industrial Tribunal at Bombay had passed an award in favour of some workmen employed at the Petitioner's factories inter alia directing the Petitioner to pay dearness allowance. In or about 2001, the Respondent filed an application under Section 33-C(2) of the ID Act before the 6 th Labour Court at Mumbai ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 2/15 wp 1128-2007.doc claiming (a) special allowance declared by the Government from time to time between 1 January 1986 and 31 December 2000, (b) dearness allowance determined in the award passed by the Industrial Tribunal, (c) overtime wages and (d) mediclaim benefits, being Application (I.D.A.) No.522 of 2001. The Labour Court rejected the Respondent's claim towards overtime wages, but allowed his claims towards special allowance, dearness allowance and mediclaim. This order is challenged by the Petitioner in the present petition.
3 Mr.Jalisatgi, learned Counsel for the Petitioner, makes the following submissions:
(i) Variable dearness / special allowance fixed by Government Notification/s is part of the minimum wages fixed by the Government and it is not permissible to compute minimum wages in two parts, namely, basic wages and dearness allowance. It is the total of the two items which constitutes minimum wages required to be paid under the notification/s, and in the event the total wages paid to an employee are more than minimum wages, no special / dearness allowance is separately payable.
(ii) The award made by the Industrial Tribunal in Reference (ID) No.65 of 1982 was exclusively in respect of five workmen working at the Petitioner's factory and had no bearing on the wages or allowances payable to the Respondent, who was working as part of the Petitioner's staff at the head office.
(iii) A proceeding under Section 33-C(2) of the ID Act is in the nature of an execution proceeding arising out of an industrial adjudication already made ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 3/15 wp 1128-2007.doc and the Labour Court in such proceeding merely computes benefits to which a workman is entitled in terms of money as a result of the adjudication and not an adjudicatory proceeding itself for determining the entitlement of a workman to the benefits claimed.
4. Mr.Shaikh, learned Counsel for the Respondent, on the other hand, submits as follows :
(i) Section 4 of the Minimum Wages Act makes it clear that the rates prescribed as minimum wages may either be (a) all-inclusive, or (b) basic rate of wages with or without the cost of living allowance and the cash value of the concessions, where authorized, or (c) a basic rate of wages and a special allowance at a rate to be adjusted. In the present case, the special allowance is not part of basic wages prescribed as minimum wages and must be paid separately over and above the basic wages prescribed. Learned Counsel relies on the judgment of the Supreme Court in the case of Airfreight Ltd. vs. State of Karnataka1 on this point.
(ii) The award passed by the Industrial Tribunal in Reference (ID) No.65 of 1982 is applicable and binding on the Petitioner also in respect of other members of its staff who were not parties to the award including the Respondent herein. Learned Counsel relies on Section 18 of the ID Act and cites the judgments of the Supreme Court in The Manager, Hotel Imperial vs. The Chief Commissioner, Delhi2 and P. Virudhachalam vs. The Management of Lotus Mills3, and the judgment of Madhya Pradesh High Court in the case of Sital Sukhiram vs. CGIT4, in support of his submissions.
1 1999 II CLR 537 2 AIR 1959 SC 1214 3 AIR 1998 SC 554 4 AIR 1969 MADHYA PRADESH 200 ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 4/15 wp 1128-2007.doc
(iii) The Respondent, working as a clerical staff, is entitled to same dearness allowance as applicable to the workmen and staff of the factory. Learned Counsel relies on the judgment of the Supreme Court in the case of Greaves Cotton and Co.Ltd. vs. Workmen5 in support.
5. Let me first consider if the award passed by the Industrial Tribunal in Reference (ID) No.65 of 1982 is applicable to the Respondent.
The reference made to the Industrial Tribunal was on the basis of a charter of demands submitted on behalf of workmen and staff working at the Petitioner's factories at Saravali and Thane. The reference was in respect of both daily rated workmen and monthly rated staff. During the pendency of the reference, on 9 May 1997, the Petitioner and the Union entered into a settlement in respect of service conditions of daily rated workmen. The reference was, thereafter, pursued only with reference to the monthly rated staff members, a list of whom was filed with the Tribunal (Ex.74 of the Tribunal's record). This list was of only five staff members mentioned therein. The Industrial Tribunal came to the conclusion that if similar benefits as those given to workmen were extended to the named staff members, it would not create any substantial additional burden on the Petitioner, considering the number of such staff members being only five. By all accounts, it is quite clear that the award was in respect of the five named staff members. Even when the award of the Tribunal was carried before this court in its writ jurisdiction, this court observed (Per Nishita Mhatre, J. in order dated 22 August 2005 in Writ Petition No.817 of 2001) that the reference was proceeded only qua the five named members of the staff. This court also noted the submissions made on behalf of the Respondent Union that the award was made applicable to only five persons who were members 5 AIR 1964 SC 689 ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 5/15 wp 1128-2007.doc of the staff and did not cast any significant financial burden on the Petitioner. This Court, whilst upholding the award, expressly held as follows :
".............. it would be appropriate to uphold the award of the Tribunal. Prior to the award the 5 staff members were drawing consolidated wages as stipulated in their appointment letters, far less than the minimum wages. They are in any event entitled to minimum wages as payment of minimum wages is not dependent on the financial capacity of the employer. The difference between the minimum wages payable, according to the Petitioners, and the wages awarded is only about Rs.1400/-. In my view, this is not a burden which cannot be borne by the company. The monthly burden cast by the award in respect of the five staff members in excess of the minimum wages is about Rs.7,000/-per month".
These observations in the order of 22 August 2005 clearly fortify the Petitioner's contention that the award pertained only to the five staffers named therein.
6 Let us now consider if by reason of the provisions of Section 18 of the ID Act, the benefit of the award can also be availed of by the Respondent, who was not working as a staff member at any of the Petitioner's factories, but at its head office in Mumbai. Any award passed by an industrial adjudicator (i.e. Labour Court, Tribunal or National Tribunal) is binding on the parties mentioned in clauses (a) to (d) of sub-section (3) of Section 18. Clause (d) is in the following terms :
"(d) Where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part."::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 :::
sat 6/15 wp 1128-2007.doc This clause is designed to deal with certain difficulties which are implicit in collective bargaining. The body of the bargaining workmen may not be a fixed body, it may be floating; even within a fixed body, all may not support a particular settlement; there may be rival unions whose members may not agree with each other; there may be workmen who may not choose to be members of any union and may thus stand outside the process of collective bargaining. This clause is introduced by the legislature to take care of these myriad situations and make any settlement arrived at during the course of conciliation proceedings (or any award passed on a reference) binding even on indifferent or unwilling workmen (or those who did not join the reference). After all the whole thrust of the exercise is to ensure industrial peace. (See, the judgment of our court in Association of Chemical Workers vs. Wahid Ali6.) This does not, however, imply that the benefit of an award intended for particular workmen or class of workmen is available to other workmen or class of workmen. It is one thing to say that an award meant for a particular class of workmen is binding on all members of that class, but quite another that an award meant for particular workmen or class of them can be availed of by others for whom it is not meant. An instance of such a case is to be found in Guest, Keen, Williams Ltd. vs. Their Workmen7, where under an award, a particular number of old workmen were to get a certain benefit. The court held that new entrants, who were by necessary implication excluded from the operation of the award, were not entitled to the benefit. It is, of course, an altogether different matter that these others may claim a parity with those for whom the award is meant and may apply for a similar award. That, however, is a matter of a separate adjudicatory process for another award and not of enforcement of the 6 1980 (Vol.I) Labour Law Journal 276 7 1956 1LLJ 199 (LAT) ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 7/15 wp 1128-2007.doc original award. (This aspect is more particularly discussed below whilst dealing with Section 33-C(2).)
7 As I have noted above, in the present case, the award passed in Reference (ID) No.65 of 1982 was meant only for the five named staff members of the Petitioner working in the factory and not generally for staff members of the Petitioner which include the Respondent. The Labour Court was, accordingly, not justified in allowing the benefits thereunder to the Respondent. The judgments of Hotel Imperial, Virudhachalam and Sital Sukhiram cited by Mr.Shaikh do not take his case any further. In Hotel Imperial, an objection was raised to the validity of the reference on the ground that it did not specify who, or how many of the total workmen of different categories, were involved in the dispute. The Supreme Court held that it was unnecessary for the purposes of Section 10 of the ID Act, where the dispute is of a general nature, to mention names of particular workmen involved in the dispute. It is only where a dispute refers to particular workmen that it was necessary to mention the names of the workmen concerned. Learned Counsel cited this judgment in support of his case of applicability of the award generally to staff members which include the Respondent. As I have noted above, however, in the present case the dispute involved particular staff members, and their names were actually mentioned in the reference. Virudhchalam's and Sital Sukhiram's cases underline the principle of collective bargaining referred to above, which makes a settlement arrived at during conciliation proceedings between the Union and the Management binding even on non-members. They have no application to the facts of our case, as I have explained above.
8 That brings me to the other arguments of Mr.Shaikh, which deal
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with (a) parity to the clerical staff with the factory workers in the matter of dearness allowance and (b) the nature of dearness allowance - whether it is separate from the concept of minimum wages or subsumed within it. At the outset, I must note that both these aspects involve an industrial adjudication based on rights and liabilities of the parties before the court, and not execution or computation pertaining to an award, that is to say, an already accomplished adjudication. In our case, the particular proceeding, where the impugned order came to be passed, was under Section 33-C(2) of the ID Act, which is in the nature of an execution proceeding and no workman can put forward a claim therein which is not based on an existing right under a settlement or an award. The Supreme Court in the case of Central Inland Water Transport Corporation Ltd. vs. The Workmen8 held as follows :
"It is now well-settled that a proceeding under section 33(C)(2) is a proceeding, generally, in the nature of an execution proceeding wherein the Labour Court calculates the amount of money due to a workman from his employer, or if the workman is entitled to any benefit which is capable of being computed in terms of money, the Labour Court proceeds to compute the benefit in terms of money. This calculation or computation follows upon an existing right to the money or benefit, in view of its being previously adjudged, or, otherwise, duly provided for. In Chief Mining Engineer, East India Coal Co. Ltd. v. Rameshwar & ors. (1968) 1 S.C.R. 140, it was reiterated that proceedings under section 33(C)(2) are analogous to execution proceedings and the Labour Court called upon to compute in terms of money the benefit claimed by workmen is in such cases in the position of an executing court. It was also reiterated that the right to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship between an industrial workman and his employer.
In a suit, a claim for relief made by the plaintiff against the defendant involves an investigation directed to the determination of (i) the plaintiff's right to relief; (ii) the 8 (1975) 1 S.C.R. 153 ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 9/15 wp 1128-2007.doc corresponding liability of the defendant, including, whether the defendant is, at all, liable or not; and (iii) the extent of the defendant's liability, if any. The working out of such liability with a view to give relief is generally regarded as the function of an execution proceeding. Determination No. (iii) referred to above, that is to say, the extent of the defendant's liability may sometimes be left over for determination in execution proceedings. But that is not the case with the determinations under heads (i) and (ii). They are normally regarded as the functions of a suit and not an execution proceeding. Since a proceeding under section 33(C)(2) is in the nature of an execution proceeding it should follow that an investigation of the nature of determinations (i) and (ii) above is, normally, outside its scope. It is true that in a proceeding under section 33(C)(2), as in an execution proceeding, it may be necessary to determine the identity of the person by whom or against whom the claim is made if there is a challenge on that score. But that is merely 'Incidental'. To call determinations (i) and (ii) 'Incidental' to an execution proceeding would be a per-version, because execution proceedings in which the extent of liability is worked out are just consequential upon the determinations (i) and (ii) and represent the last stage in a process leading to final relief. Therefore, when a claim is made before the Labour Court under section 33(C)(2) that court must clearly understand the limitations under which it is to function. It cannot arrogate to itself the functions- say of an Industrial Tribunal which alone is entitled to make adjudications in the nature of determinations (i) and (ii) referred to above, or proceed to compute the benefit by dubbing the former as 'Incidental' to its main business of computation. In such cases determinations (i) and (ii) are not 'Incidental' to the computation. The computation itself is consequential upon and subsidiary to determinations (i) and (ii) as the last stage in the process which commenced with a reference to the Industrial Tribunal. It was, therefore, held in State Bank of Bikaner and Jaipur v. R.L. Khandelwal (1968 L.L.J. 589) that a workman cannot put forward a claim in an application under section 33(C) (2) in respect of a matter which is not based on an existing right and which can be appropriately the subject-matter of an industrial dispute which requires a reference under section 10 of the Act."
9 Based on this law, it is not permissible to consider if any parity could be extended to the Respondent with factory workers or other similarly ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 10/15 wp 1128-2007.doc placed workmen in the matter of dearness allowance or special allowance in a proceeding under Section 33-C(2) such as the present. The judgment of Greaves Cotton and Co.Ltd. (supra) has, accordingly, no application to our case.
10 The Labour Court was not right in awarding special allowance or dearness allowance to the Respondent by analysing the relevant provisions of law, since that, again, would be a fresh adjudicatory exercise impermissible for the Court within its jurisdiction under Section 33-C(2). On this reasoning, I need not really decide the merits of the arguments in this behalf but considering the extensive arguments advanced by either sides before me on merits on this issue, I propose to discuss even the merits of the claim of dearness or special allowance said to be payable to the Respondent in the following paragraphs.
11 Section 2(h) of the Minimum Wages Act defines "wages" as all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment were fulfilled, be payable to a person employed in respect of his employment. Under Section 3 the appropriate Government has to fix minimum rates of wages payable to employees employed in an employment specified in Part I or Part II of the schedule and also in an employment added by notification under Section 27.
These minimum wages are to be reviewed at such intervals not exceeding five years as the approbate Government may deem fit. Under sub-section (1) of Section 4 any minimum rate of wages fixed or revised by the appropriate Government in respect of a schedule employment may consist of -
(i) a basic rate of wages and a special allowance at a rate to ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 11/15 wp 1128-2007.doc be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index applicable to such workers ; or
(ii)basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concessional rates, where so authorised; or
(iii) an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any.
Under sub-section (2) of Section 4 the cost of living allowance and cash value of the concessions are to be computed by the competent authority at such internals and in accordance with such directions as may be specified or given by the appropriate Government.
12 From these provisions, it is clear that minimum wages must provide not merely for the bare subsistence of life but also for preservation of the efficiency of the worker, and must accordingly provide for some measure of education, medical requirements and amenities for himself and his family. This cost is likely to vary depending upon prevailing market prices of various items involved. If there are inflationary conditions prevailing in the country, then minimum wages fixed at a particular point of time would not serve the purpose. Therefore, Section 4 contemplates that minimum wages fixed at a particular point of time should be revised from time to time. To that end, ::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 ::: sat 12/15 wp 1128-2007.doc Section 4 mandates the appropriate Government to not just fix the basic rate of wages but also provide for special allowances from time to time at the rate to be adjusted so as to accord as nearly as practicable with a variation in the cost of living index applicable to the concerned workers. Section 4 gives various alternatives to the appropriate Government for achieving this. Whilst revising the minimum wages, the Government may refix altogether the wages earlier fixed or add a dearness or special allowance so as to bring up and adjust the wages earlier fixed to the inflation in cost of living or add a cash value of concessions to the wages earlier fixed. Whatever be the method for meeting the requirement of fixation of new wages, what is fixed as minimum wages is the total remuneration which should be paid to the employees covered by the schedule. The Supreme Court judgment in the case of Airfreight Ltd. (supra) makes it clear that the idea of fixing such wages in the light of the cost of living at a particular juncture of time and of neutralising the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index, is to provide for a minimum wage commensurate with the cost of subsistence of life and preservation of efficiency of workers by providing for a measure of education, medical requirements and amenities at any particular point of time. The following observations of the Supreme Court in Airfreight Ltd. may be noted in this behalf :
"Once rates of minimum wages are prescribed under the Act, whether as all inclusive under Section 4(1)(iii) or by combining basic plus dearness allowance under Section 4(1)
(i), (they) are not amenable to split up. It is one pay package. Neither the scheme nor any provision of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each necessities taken into consideration for fixing the same."::: Uploaded on - 13/02/2017 ::: Downloaded on - 14/02/2017 00:19:07 :::
sat 13/15 wp 1128-2007.doc On the basis of this reasoning, the Supreme Court further held that in cases where the employer is paying a total sum, which is higher than minimum rates of wages fixed under the Act including the cost of living index (VDA), he is not required to pay VDA separately. The Court in no uncertain terms held as follows :
"Dearness Allowance is part and parcel of cost of necessities. In cases where the minimum rates of wages is linked up with V.D.A. it would not mean that it is a separate component which is required to be paid separately where the employer pays a total pay package which is more than the prescribed minimum rate of wages."
13 In the light of the law noted as above, it is quite apparent that if what the employer pays to his employee is what is payable towards minimum wages consisting of both basic wages and dearness allowance or special allowance fixed by the appropriate Government from time to time or any higher sum, no further dearness allowance is payable to the employee in accordance with the then applicable notifications. In the instant case, it is not really in dispute that what is paid by way of wages to the Respondent is a sum higher than such minimum wages and in the premises, there is no question of payment of any further dearness allowance on the basis of the notifications issued by the appropriate Government. The impugned order of the Labour Court on the question of special allowance or dearness allowance, thus, cannot be sustained even on merits.
14 Accordingly, the impugned order of the Labour Court cannot be sustained for any of the claims determined by it. The petition, in the premises, deserves to be allowed.
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15 Coming now to the operative order that needs to be passed in
the petition, the following needs to be noted. Pending this petition, a sum of Rs.3,37,776/- was deposited by the Petitioner in court towards the dues claimed by the Respondent. The Respondent applied to this court by way of Notice of Motion No.597 of 2007 for permission to withdraw the amount deposited by the Petitioner, along with accrued interest. This court, by its order dated 9 January 2008, acceded to the request on condition of a surety for the like amount and the Respondent's undertaking that if he was required to reimburse the amount to the Petitioner, he shall do so within the stipulated time and with interest at the rate of 12% p.a. The Respondent accordingly submitted an undertaking to the court and withdrew the sum of Rs.4,57,035/- (which comprised of the original deposit and accrued interest till then). Since the petition is being decided in favour of the Petitioner, the Respondent is liable to bring back this amount. In the meantime, however, the Respondent has superannuated. The estimated retirement benefits payable to the Respondent admittedly work out to about Rs.2,57,035/-. The balance amount to be refunded to the Petitioner thus may work out to Rs.2,00,000/- with interest.
16 Learned Counsel for the Petitioner, however, after taking instructions from his client, graciously offers an ad-hoc waiver of Rs. Rs.1,50,000/- to the Respondent as a lump sum ex-gratia payment considering his long service with the Petitioner for all these years. Learned Counsel also offers to waive all applicable interest on the amount withdrawn by the Respondent in terms of the order of 9 January 2008. Mr.Shaikh for the Respondent accepts this arrangement for the purpose of calculations towards the moulding of the relief.
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17 In the premises, the writ petition is disposed of in terms of the
following order :
(I) The impugned order of the Labour Court dated 12
February 2007 passed in Application IDA No.522/2001 is quashed and set aside;
(II) The Respondent shall refund a sum of Rs.
Rs.50,000/- to the petitioner from out of the withdrawal made by him in pursuance of the interim orders passed by this court within a period of six weeks from today; and (III) If the amount is not so paid within six weeks, it shall carry an interest at the rate of 12% p.a. from the expiry of six weeks till payment or realization.
(IV) There shall be no order as to costs.
(S.C. Gupte, J.)
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