Madras High Court
The Board Of Trustees Of vs The Assistant Labour Commissioner on 9 July, 2010
Author: K.K.Sasidharan
Bench: Elipe Dharma Rao, K.K.Sasidharan
In the High Court of Judicature at Madras
Dated: 09.07.2010
Coram:
The Hon'ble Mr. Justice ELIPE DHARMA RAO
AND
The Hon'ble Mr.Justice K.K.SASIDHARAN
W.P.Nos.6635, 12785 to 12789, 12790 to 12795, 12796 to 12800, 12801 to 12806, 12810 to 12812, 18371 to 18376, 18377 to 18382 23547 to 23557 , 25896 to 25904, 18383 to 18388 of 2005,
W.P.Nos.1052 to 1056, 10106 to 10120, 17218 to 17222, 21119 to 21123, 923 to 927, 928 to 931,918 to 922 of 2006
&
W.P.M.P.Nos.7288, 14007 to 14011, 14012 to 14017, 14018 to 14022, 14023 to 14028, 14032 to 14034, 19962 to 19967, 19968 to 19973, 25701 to 25711, 28297 to 28305, 19974 to 19974 to 19979 of 2005, 1192 to 1196, 11417 to 11421, 11423 to 11432, 16233 to 16237, 1057 to 1061, 1062 to 1065, 1052 to 1056 of 2006 & M.P.Nos.1/2006 (5 Nos.)
&
W.V.M.P.Nos.1197 to 1202, 1004 to 1008, 1690 to 1704, 1705 to 1709, 780 to 787, 1217, 788 to 793, 1215, 1216, 995 to 999, 1000 to 1003, 1203 to 1208, 990 to 994, 1209 to 1214 of 2006
W.P.No.6635 of 2005
The Board of Trustees of
Chennai Port Trust
Rep.by its Chairman
Chennai Port Trust
Rajaji Street
Chennai-600 001. ..Petitioner
Versus
1. The Assistant Labour Commissioner
Commissioner (Central)-I
(Controlling Authority
under the payment of Gratuity Act)
No.26, Haddows Road
Shastri Bhavan
Chennai.
2. P.Manickam ..Respondents
Prayer in W.P.No.6635 of 2005
Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorarified Mandamus calling for the records comprised in G.A.No.135/2004 on the file of the Assistant Labour Commissioner (Central)-I (Controlling Authority under the Payment of Gratuity Act) dated 27.12.2004 and quash the same and consequently forbear the respondents from claiming any more amount of gratuity other than what has already been paid to the second respondent.
Mr.R. Krishnamoorthy
Senior Counsel
for Mr.R.Karthikeyan :For Petitioner in
all Writ Petitions.
Mr.K.Gunasekar, ACGSC :For R.1 in W.P.Nos. 6635, 18371 to 18376, 18377 to 18382, 18383
to 18388 of 2005
Mr. P.Chandrasekaran,
SCGSC :For R.1 in W.P.Nos. 12785, 12790, 12796 to
12800, 12801, 12803, 12804 to 12806, 12810 to 12812 of 2005
Mr.K.M.Venugopal :For R.1 in W.P.Nos.
923 to 927 of 2006
Mr.K.Ravindranath :For R.1 in W.P.Nos.
10106 to 10120/2006
Mr.K.Ravichandrababu :For R.1 in W.P.Nos.
17218 to 17222/2006
Mr.V.Bharathidasan : For R.1 in W.P.Nos.
SCCG 21119 to 21123/2006
Mr.S.Vijayakumar : For R.1 in W.P.Nos.
SCGSC 23547 to 23557 of 2005
Mr.V.Ravi,SCGPC : For R.1 in W.P.Nos.
928 to 931 of 2006
Mr.Patti B. Jeganathan : For R.1 in W.P.Nos.
918 to 922 of 2006
Mr.R.Ramesh : For R.2 in W.P.Nos.
6635 of 2005, 12786 to
12788, 12791, 12792 &
12795 , 12797 & 12798,
12801, 12803, 12804,
12806, 12810 & 12811 of 2005
Mr.M.Murthy : For R.2 in W.P.No.
12785 of 2005
Mr.V.Rajaram : For R.2 in W.P.No.
12790 of 2005
Mr.K.Palani : For R.2 in W.P.No.
12796 of 2005
Mr.B.Johny : For R.2 in W.P.NO.
12800 of 2005
Mr.K.Sarangan : For R.2 in W.P.No.
12802 of 2005
Mr.P.Arumugam : For R.2 in W.P.No.
12805 of 2005
Mr.S.Dilli Babu : For R.2 in W.P.No.
12812 of 2005
Ms.R.Vaigai : For R.2 in W.P.Nos.
18371 to 18376, 23547
to 23557, 25896 to
25904, 18377 to 18382
18383 to 18388 of 2005
1052 to 1056, 10106
to 10120, 17218 to
17222, 918 to 931 of 2006
Mr.J.Mugundagopal : For R.2 in W.P.No.
21119/2006
Mr. A.Alagesan : For R.2 in W.P.No.
21120/2006
Mr.G.Mohan : For R.2 in W.P.No.
21121/2006
Mr.G.Chandran : For R.2 in W.P.No.
21122/2006
Mr.K.Ganesan : For R.2 in W.P.No.
21123/2006
------------------
COMMON ORDER
K.K.SASIDHARAN, J These writ petitions are directed against the order passed by the Controlling Authority under the Payment of Gratuity Act, whereby and whereunder the petitioner was directed to calculate gratuity by including the piece rates paid to the employees,in addition to the monthly wages.
2. Since contentions are identical in all these writ petitions, the factual matrix as found in W.P.No.6635 of 2005 is taken to narrate the background facts.
THE FACTS:-
W.P.NO.6635 OF 2005
3. Chennai Port Trust Corporation is the petitioner in the writ petition. In the affidavit filed in support of the writ petition the petitioner contended thus:-
4. Chennai Port Trust was established by a Central Act and it is governed by the Major Port Trust Act, 1963. The functions of the Chennai Port Trust have been carried out by the Board of Trustees constituted by the provisions of the Major Port Trust Act. Similarly, the Madras Dock Labour Board (hereinafter referred to as "MDLB") was established and administered by the Schemes framed under the Dock Workers (Regulation of Employment) Act, 1948 to facilitate the functions under those enactments.
5. The daily rated workers previously employed in MDLB were brought under the control of Chennai Port Trust and they were paid monthly wages with effect from the date of merger in pursuance of the agreement dated 25 May, 2001. The merger agreement provides the method for ascertaining the gratuity to such of those erstwhile MDLB workers in clauses 7, 10, 34 and 35. As per the provisions of the merger agreement, the monthly wages will be taken into account for determining the quantum of gratuity payable to the employees with effect from 1 July, 2001. In short, the erst-while daily rated workers of MDLB, who attained superannuation on and after 1 July, 2001 would be treated on par with the regular employees of Chennai Port Trust. The gratuity payable to Shore work employees will be determined on the basis of the monthly wages alone. Therefore, the daily rated workers under the erstwhile MDLB were entitled for gratuity based on their monthly wages. Piece rate paid to such employees would not be taken for computation of gratuity.
6. While the matters stood thus, twenty nine of the erst-while daily rated workers of MDLB, who have become regular employes of Chennai Port Trust by virtue of the merger agreement dated 25 May, 2001 opted for voluntary retirement scheme introduced during 2002-2003. The employees including the second respondent herein were paid gratuity amount calculated on the basis of the formula as contained in the merger agreement and in terms of the provisions of the Payment of Gratuity Act. The second respondent filed a claim petition before the Assistant Labour Commissioner, Chennai in Form N claiming difference in gratuity amount. The said application was taken on file in G.A.No.135 of 2003 on the file of the first respondent.
7. Before the first respondent, the second respondent employee contended that he was entitled for more amount of gratuity than what he was actually paid. It was his further contention that the amount paid to him by way of piece rate also should be included in the term "wages" for the purpose of computation of gratuity.
8. The claim petition was contested by the petitioner by filing counter statement. Before the Controlling Authority, the petitioner contended that what was contemplated under clause 34 of the merger agreement was only time rated wages and not piece rate wages. Clause 35 of the agreement provides that all those employees, who were superannuated subsequent to 1 July, 2001 would be treated on par with Chennai Port Trust Shore Work employees. Since there was no such provision to compute the piece rate also along with the monthly wages for the purpose of payment of gratuity to the employees of Chennai Port Trust, there was no question of computing piece rate along with the monthly wages in the case of the second respondent.
9. The Controlling Authority was of the view that the concept of payment of piece rate was not in the nature of over time wages and as such it would come under the term "wages" as defined under Section 2(s) of the Payment of Gratuity Act. Accordingly, the objection raised by the petitioner was negatived and an award was passed in favour of the second respondent. It is the said award which was challenged in the respective writ petitions.
10. These writ petitions came up for hearing before a Division Bench on 18 April, 2007. The Division Bench was of the view that certain vital facts in the form of necessary evidence was lacking in order to arrive at a just conclusion even for applying the ratio of the subsequent judgment of the Supreme Court in TI CYCLES OF INDIA, AMBATTUR v. M.K.GURUMANI AND OTHERS (2001(7) SCC 204) and DIALY PRATAP v. R.P.F. COMMISSIONER (1998(8) SCC 90) wherein a distinction came to be made as between the wages paid on production basis, taking into account the overall production of the employees, without reference to any individual contribution towards such higher production. Accordingly, the Division Bench referred the matter to the first respondent for rendering a finding. The relevant portion of the direction reads thus:-
"Therefore, we feel it appropriate to call for a finding from the first respondent on the above referred to issues by permitting the petitioner as well as the contesting respondents to let in necessary evidence in support of their respective stand both oral as well as documentary and based on such a finding to be rendered by the first respondent, all these writ petitions can be disposed of. With that view, while keeping all these writ petitions pending, we only direct the petitioner and the respective second respondents in W.P.Nos.25960, 6635, 18371, 18384 of 2005 and 1053 of 2006 to go before the first respondent and let in whatever evidence required in support of their respective stand. The first respondent is directed to record the evidence and also permit them to file the documents in support of their respective stand and render a finding on the question "whether the payment by way of piece rate earnings would form part of wages or the same were to be treated as incentive/production bonus paid to the respective second respondents." The first respondent shall make an independent consideration based on the evidence placed before him uninfluenced by anything stated in this order as well as his own order impugned in these writ petitions. If the records had been sent to this Court, the Registry shall return the same while forwarding a copy of this order to the first respondent. If the records are with the respective counsel appearing for the first respondent, the same shall be returned forthwith to enable the first respondent to carry out the exercise as directed in this order. The first respondent shall carry out the directions contained in this order within three months from the date of receipt of a copy of this order as well as the records."
11. The issue was once again considered by the first respondent. The parties have adduced evidence before the first respondent and they have also filed necessary affidavits in support of their respective contentions. Ultimately, the Controlling Authority by way of a detailed order dated 31 October, 2008 concluded that the piece rate wages/earnings earned by the workman shall invariably form part of wages and the same shall have to be taken into account for the purpose of calculation of gratuity.
SUBMISSIONS:-
12. Learned Senior counsel for the petitioner would submit thus:-
(a) The respective employees were working originally in Madras Dock Labour Board and a merger has taken place, whereby and whereunder the Dock Labour Board workers were absorbed in Chennai Port Trust. As per the said merger agreement dated 25 May, 2001 it was resolved that the existing practice of calculating the basic pay by dividing twenty six days multiplied into thirty days will be discontinued and a consolidated amount of Rs.1,000/- per month per worker as against the demand of Rs.1,200/- will be paid as personal pay to all the categories of incumbent workers uniformly, without calculating individually. As per clause 35 it was agreed to effect the payment of gratuity to those piece-rated workers governed under the four schemes of MDLB, who have opted to retire under the Special Voluntary Retirement Scheme valid upto 31 March, 2001 and they would be paid gratuity in terms of proviso under Section 4(2) of the Payment of Gratuity Act, 1972 as a special case. It was also stipulated that for those superannuating after 1 July, 2001, normal rules applicable to Port Trust shore workers will be applicable. Since it was not the practice in the Port Trust to compute the piece rate along with the monthly wages for the purpose of gratuity, there was no question of giving a different treatment to the erst-while workers of MDLB.
(b) The Controlling Authority placed reliance on a decision of this Court in ANGLO FRENCH TEXTILES LTD., v. THE PRESIDING OFFICER, LABOUR COURT (LABIC of 1981 page 202). However, in the subsequent judgment of the Supreme Court in TI CYCLES OF INDIA , AMBATTUR v. M.K.GURUMANI AND OTHERS (2001(7) SCC 204), the Supreme Court has clearly stated that incentive given to the workers would not come under the term "wages" for the purpose of computing gratuity. Therefore, the finding given by the second respondent was not in accordance with the law laid down by the Supreme Court.
13. The learned counsel for the second respondent would contend thus:-
(a) The Port Trust has framed service regulations and those regulations also indicates the manner in which wages have to be computed for the purpose of payment of gratuity and pension.
(b) The Memorandum of Settlement in clause 7 provides only for a change in the computation of basic pay inasmuch as hitherto it was the practice to divide twenty six days (exclusive of four weekly-off days) multiplied into thirty days and a new system adopting a consolidated amount of Rs.1,000/- per month per worker was taken. The said provision has nothing to do with the claim of piece-rate to be included in the term "wages" for computation of gratuity.
(c) Clause 35 of the agreement relates to those workers, who were superannuated after 1 July, 2001. Even the said provision contains a specific clause to the effect those superannuated after 1 July, 2001, normal rules applicable to Port Trust shore workers would be applicable. The normal rule was to calculate the monthly wages with the piece rated wages and as such the claim made by the workmen were in consonance with clause 35 of the agreement.
(d) Clause 34 of the agreement was in the nature of a protective umbrella inasmuch as it provided that the workers under MDLB shall hold office or serve under Chennai Port Trust on the terms and conditions which are not in any way less favourable than those which would have been admissible to them, if not been transferred to Chennai Port Trust.
(e) It is the admitted case of the Port Trust as found from the pleadings as well as in the deposition before the Controlling Authority that it was the practice to calculate the piece rate wages also with the normal wages for computing the total wages for the purpose of Gratuity. Therefore the claim was fully in accordance with the provisions of the merger agreement.
(f) The judgment of the Supreme Court in TI Cycles case (2001(7) SCC 204), has no application to the case on hand. In the said case, the issue before the Supreme Court was as to whether the workers were entitled to calculate incentive payment as a component of wages so as to compute the amount of gratuity. However in the subject case, piece rate wages were always considered as part of the wages and as such the facts of the present case are altogether different from the facts considered by the Supreme Court in TI Cycles case.
THE ISSUE:
14. The substantial question to be decided in this writ petition is as to whether the piece rate wages earned by the workmen should be included under the term "wages" for the purpose of computing gratuity.
ANALYSIS:
15. The workmen in all these writ petitions were originally the employees of the Madras Dock Labour Board. The Government of India took up a decision for merger of Madras Dock Labour Board with Chennai Port Trust and accordingly the Ministry of Transport directed the petitioner to arrive at a memorandum of understanding with the employees of the Madras Dock Labour Board so as to effect merger. Accordingly, an agreement was entered into between the parties on 25 May, 2001. The earlier practice of calculating the basic pay by dividing twenty six days of work multiplied into thirty was discontinued and a consolidated amount of Rs.1,000/- per month per worker was paid as personal pay to all the categories of incumbent workers uniformly, without calculating individually. The provision for such calculation was inserted as per clause 7 of the agreement, which reads thus:
"7. Protection of wage of cargo handling workers:-
As a result of grouping of categories of workers with uniform scales of pay, all daily rated workers of MDLB will be brought under a monthly wage system and consequently, the existing practice of calculating the basic pay by dividing 26 days (exclusive of fou r weekly-off days) multiplied into 30 days will be discontinued and a consolidated amount of Rs.1,000/- per month per worker as against the demand of Rs.1,200/- will be paid as a personal pay to all the categories of incumbent workers uniformly, without calculating individually.
However, workers appointed after the date of this agreement shall not be entitled to this additional benefit of Rs.1,000/- per month. A similar pay protection would be given to all other categories of workers who are on daily rated wages and whose emoluments fall short due to the conversion into a monthly wage system. This personal pay of Rs.1,000/- granted towards wage protection shall be reckoned for statutory benefits like pension, gratuity, compensations, etc., and shall be applicable only to the workers who are on rolls on the date of merger and it shall not apply to workers who join after the date of merger. This personal pay will not be adjusted either against future increments or future pay revision. This pay will continue to be paid until the workers retire from service or cease to be in service. It has been further agreed that all other claims in this regard shall be treated as settled and no other claims shall be made (with this protection it is agreed that no other claim whatsoever shall be made)."
16. The parties to the agreement were unanimous in their view that the existing privileges enjoyed by the employees of MDLB should be continued and the new terms should not be less favourable to them. Accordingly clause 34 was inserted in the agreement, which reads thus:-
"34. Application of CH.P.T., rules for all personnel of MDLB:-
Every officer, staff and worker serving under MDLB, shall hold office or serve under CH.P.T. Board on the terms and conditions, which are not in any way less favourable than those which would have been admissible to him/her if not been transferred to CH.P.T., and shall continue to do so unless and until his/her employment in CH.P.T., is duly terminated or until his/her tenure, remuneration or terms and conditions of service are duly altered by CH.P.T."
17. The agreement also provided for payment of benefits to those workers who would be superannuating from the service of the Board as on 1 July, 2001. The relevant clause 35 reads thus:
"35. Protection of Gratuity to certain workers:
Agreed to effect the payment of gratuity to those piece-rated workers governed under the four schemes of MDLB who have opted to retire under the Special Voluntary Retirement Scheme valid upto 31.3.2001 and extended upto 30.6.2001 as per MOST letter No.LB-16016/4/98-L.II dated 24.4.2001 and to those workers who will be superannuating from service of the Board as on 1.7.2001 (forenoon), in terms of proviso under Section 4(2) of the Payment of Gratuity Act, 1972, as a special case. For those superannuating after 1.7.2001, normal rules applicable to Port Trust Shore workers will be applicable."
18. There is a reference in clause 35 that for those superannuating after 1 July, 2001, normal rates applicable to Port Trust Shore workers would be applicable. Therefore the answer to the question depends upon the relevant rule which was applicable to the Port Trust Shore Workers as on the date on which the agreement was executed.
19. The petitioner is a statutory body covered by Major Port Trust Act. They have framed their own service regulations. The Trust has framed Madras Port Trust Pension Regulations, which includes regulations regarding payment of gratuity. Rule 45 of the Pension Regulations reads thus:-
"45. Payment of Gratuity to employees governed by 'The Payment of Gratuity Act, 1972' and the Rules framed thereunder.
(i) In respect of employees to whom the 'The payment of Gratuity Act, 1972' applies shall be eligible for gratuity in accordance with the provisions of the 'payment of Gratuity Act, 1972' (Act XXX of 1972) and rules framed thereunder from time to time subject to the following liberalisation.
(ii) Wages for the purpose of computing gratuity shall include pay as defined under F.R.9(21) Dearness Allowance including Additional Dearness Allowance, piece rate earnings, Incentive earnings and other such payments under a payment by Results Scheme wherever applicable, provided that in respect of categories governed by piece rate, incentive and payment by result Scheme wages shall be computed on the average of total wages received by them for a period of 3 months or 10 months immediately preceding the termination of employment whichever is beneficial." (emphasis supplied)
20. The Pension Regulations extracted above gives a clear indication that wages for the purpose of computing gratuity should also include piece rate earnings. Even though the petitioner contended that in pursuance of the directions issued by the Government of India, they have discontinued the earlier practice of computing piece-rate earnings with the actual rate for the purpose of payment of gratuity, there was no consequential amendment made to the pension regulations. Therefore clause 35 of the agreement would come into operation. The said provision is very categorical when it was stated that for those superannuating after 1 July, 2001, normal rules applicable to Port Trust Shore Workers would be applicable.
21. Section 2(s) of Payment of Gratuity Act defines wages thus:-
"Wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him incase and includes dearness allowance but does not include any bonus, commission, house-rent allowance, overtime wages and any other allowance."
22. The concept of wages would include all types of wages earned by an employee and the exceptions are the amount of bonus, commission, house-rent allowance, overtime wages or other allowances. The attempt of the petitioner before the Controlling Authority was to treat the piece rate wages similar to over-time wages. However the fact is otherwise. Piece rate wages has nothing to do with over-time wages. In fact, piece-rate incentives are paid only when the employee completes the work fixed for him and does certain extra work within his working hours. Overtime wages are admittedly for working extra hours beyond the stipulated working hours. Therefore by no stretch of imagination, piece-rate earnings could be treated as over-time wages so as to exclude the same from the purview of Section 2(s) of the Payment of Gratuity Act, 1972.
23. Before the Controlling Authority, witnesses were examined on the side of the petitioner. The proof affidavit of R.W.2 Thiru G.Senthilvel gives a clear indication that piece rate was taken into account till the year 1993 and it was only in the year 1994 it was withdrawn in view of the communication sent by the Government by way of a circular dated 24 May, 1994. The relevant piece of evidence tendered by R.W.2 in his chief evidence reads thus:-
"I submit that MDLB workers were paid only on daily rated wages before the merger and after the merger, the employees are treated on part with the Chennai Port Trust employees and given a monthly rate system of wages. The sample Pay Slip of the mazdoor employee Pre and Post merger is marked as exhibit R.23. AS far as retirement benefits are concerned, before the merger, the piece rate is taken into account for the benefit of the pension and gratuity. After the merger settlement, as per clause 35, those were retired after 1.7.2001 afternoon were not entitled for the same benefit and they were paid as per clause 4(2) of the Payment of Gratuity Act."
24. During his cross examination M.W.1 Thiru P.Venkateshwaran, Traffic Manager of Chennai Port Trust very clearly admitted that on an average, piece-rate earnings of the worker would be approximately 30 to 40% of the basic pay. It was also categorically admitted by him that he was aware that the workers were paid their gratuity by including their piece rates before merger. Similarly, during the cross examination of M.W.2 Thiru G.Senthilvel, Senior Deputy Chief Accounts Officer, it was his clear statement that the regulations have not yet been amended to exclude piece-rate earnings for calculation of gratuity. However based on Government directions, the piece rate earnings were excluded for the purpose of calculation of gratuity as the Government directions prevail over the regulations.
25. The petitioner has also produced a copy of the circular issued by the Government advising the Major Port Trust to exclude the piece-rate earnings for the purpose of calculation of gratuity. The said circular was not followed by an amendment of the pension regulations. So long as the pension regulations provides for treating the piece rate wages as also wages within the meaning of Section 2(s) of the Payment of Gratuity Act, there is no question of excluding such wages.
26. Service Regulations are statutory in nature and the same is binding not only on the petitioner but also on the second respondent. Therefore mutual rights and obligations have been created on the basis of the service regulations. It is not open to the petitioner to exclude the piece rate wages from the purview of the wages for computing the gratuity amount. Even as per clause 34 of the Merger Agreement, service conditions should not be unfavourable to the Dock workers subsequent to merger. In short, the Dock workers should be given the very same emoluments and other service benefits and the merger should not be to their detriment. The various provisions of the said agreement would also gives a clear indication to that effect.
27. The learned Senior Counsel for the petitioner by placing reliance on the judgment of the Supreme Court in TI CYCLES v. M.K.GURUMANI AND OTHERS (2001) 7 S.C.C. 204 contended that the Supreme Court has made the legal position clear that the incentive payment would not be regarded as "wages" and therefore it would not be taken into account for the purpose of gratuity.
28. In TI CYCLE's case there was an incentive scheme in operation. The objectives of the scheme was to ensure optimum production of high quality, promote safety and cost consciousness and to maintain high level of productivity. Clause 9.1 of the scheme expressly provided that incentive payable under the Scheme will not be regarded as "wages" and therefore payment shall not be taken into account for the purpose of leave wages, overtime wages, wages in lieu of notice, provident fund contributions, bonus, gratuity and other allowance. The Supreme Court found that the payments were made not on the basis of pieces of per man day or for piece-rate work. It was only an additional incentive for payment of bonus in respect of extra-work done. The measure of extra-work done is indicated by pieces and not wages, and as such it was only in the said background facts the Supreme Court held that incentive payment cannot be regarded as "wages" and therefore it would not come under the purview of wages for payment of gratuity.
29. The facts in the present cases are entirely different. The pension regulations contain a specific provision to treat the piece rate wages as "wages" for the purpose of payment of gratuity. The Merger Agreement also contains a provision that the service conditions in the Port Trust, should not be less favourable than those which would have been admissible, if the employee has continued in the earlier service. The petitioner has also undertaken as per clause 35 of the agreement to follow the normal rules applicable to the Port Trust Shore Workers, in case of superannuation of MDLB workers after 1 July, 2001. Therefore piece rate wages were considered as part of the wages.
30. Learned counsel for the second respondent relied on the judgment of the Supreme Court in DAILY PARTAP v. REGIONAL PROVIDENT FUND COMMISSIONER (1998(8) SCC 90) in support of her contention that piece rate wages was not in the nature of simple incentive. In Daily Partap case, the issue was as to whether the employer was liable to remit contribution under Section 6 of the Employees Provident Funds and Miscellaneous Provisions Act on the amounts paid by them to the employees concerned under the Production Bonus Scheme as promulgated by them at the relevant time. The management contended that the amount in question were neither Dearness allowance nor retaining allowance and it was not even part of basic wages as the same fell within the scope of the words "bonus" or "any other similar allowance" in the exception category (ii) of the definition of "basic wages" in Section 2(b). However the said contention was negatived by the Supreme Court. The relevant observation reads thus:-
"10. ............ It is easy to visualise that if the workman was paid an amount for the output given by him in a shift which is up to the norms prescribed for his output, it would obviously remain in the realm of "basic wages". In order that the amount goes beyond the "basic wages", it has to be shown that the workman concerned had become eligible to get this extra amount for the work beyond the normal work which he was otherwise required to put in....."
31. In a recent decision in ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK RETIRED EMPS. ASSN. [2009 (14) SCALE 577] the Supreme Court in the context of interpreting provisions of the Payment of Gratuity Act, 1972 observed that labour and welfare legislations have to be liberally construed having due regard to the Directive Principles of State Policy. The observation reads thus:
"11.We shall proceed to examine the point urged by the learned counsel for the appellant. Remedial statutes, in contra distinction to penal statutes, are known as welfare, beneficient or social justice oriented legislations. Such welfare statutes always receive a liberal construction. They are required to be so construed so as to secure the relief contemplated by the statute. It is well settled and needs no restatement at our hands that labour and welfare legislation have to be broadly and liberally construed having due regard to the Directive Principles of State Policy. The Act with which we are concerned for the present is undoubtedly one such welfare oriented legislation meant to confer certain benefits upon the employees working in various establishments in the country.
12.Krishna Iyer, J in Som Prakash Rekhi Vs. Union of India stated the principle in his inimitable style that benignant provision must receive a benignant construction and, even if two interpretations are permissible, that which furthers the beneficial object should be preferred. It has been further observed: "We live in a welfare State, in a "socialist" republic, under a Constitution with profound concern for the weaker classes including workers (Part IV). Welfare benefits such as pensions, payment of provident fund and gratuity are in fulfilment of the Directive Principles. The payment of gratuity or provident fund should not occasion any deduction from the pension as a "set-off". Otherwise, the solemn statutory provisions ensuring provident fund and gratuity become illusory. Pensions are paid out of regard for past meritorious services. The root of gratuity and the foundation of provident fund are different. Each one is a salutary benefaction statutorily guaranteed independently of the other. Even assuming that by private treaty parties had otherwise agreed to deductions before the coming into force of these beneficial enactments they cannot now be deprivatory. It is precisely to guard against such mischief that the non obstante and overriding provisions are engrafted on these statutes."
13.Interpreting the provisions of the said Act this Court in Sudhir Chandra Sarkar Vs. Tata Iron and Steel Co. Ltd. observed that pension and gratuity coupled with contributory provident fund are well recognised retrial benefits governed by various statutes. These statutes are legislative responses to the developing notions of the fair and humane conditions of work, being the promise of Part IV of the Constitution. It was observed: "the fundamental principle underlying gratuity is that it is a retirement benefit for long service as a provision for old age. Demands of social security and social justice made it necessary to provide for payment of gratuity. On the enactment of Payment of Gratuity Act, 1972 a statutory liability was cast on the employer to pay gratuity."
32. The proceedings before the first respondent was a statutory proceedings. The petitioner was given sufficient opportunity to produce documents in support of their contention that piece rate wages were not intended to be included in the wages for payment of gratuity. However no such documents were produced before the said authority. In fact in the subsequent proceedings dated 31 October, 2008, the Controlling authority has clearly given a factual finding. The available documents were scanned by the Controlling Authority in the light of the evidence tendered by the parties. The findings were recorded. Those findings were only in accordance with the pension regulations framed by the petitioner. It was also in consonance with the merger agreement and more particularly clauses 34 and 35. The Controlling Authority has given sufficient reasons for arriving at the conclusion. Therefore we do not find any merit in the contentions raised by the petitioner and as such the writ petitions are liable to be dismissed.
33. In the result, the writ petitions are dismissed.
34. While granting interim stay, this Court directed the petitioner to deposit 50% of the amount computed by the Controlling Authority and the said amount was directed to be deposited in a Nationalised Bank initially for a period of three years to be renewed periodically. It was also indicated that in case ultimately the writ petition fails, the petitioner should pay the balance amount with appropriate bank interest. In view of the dismissal of the writ petitions, we permit the concerned employees to withdraw 50% of the amount with accrued interest. We direct the petitioner to pay the balance amount with interest at 7% per annum to be calculated with effect from 27 December, 2004. Such payment shall be made within a period of eight weeks from the date of receipt of a copy of this order. In case 50% of the amount was not deposited in pursuance of the order of this court, the entire amount shall be paid with interest at 7% per annum within the outer time limit indicated above. Consequently, the connected W.P.M.Ps and W.V.M.Ps are closed. No costs.
Tr