Calcutta High Court
Kesoram Industries Ltd vs E.S.I. Corporation & Ors on 31 August, 2015
Author: I.P. Mukerji
Bench: I.P. Mukerji
W.P. No. 1992 of 1995
W.P. No. 1657 of 2003
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Original Side
Kesoram Industries Ltd.
Vs.
E.S.I. Corporation & Ors.
For the petitioner: Mr. Siddhartha Mitra, Sr. Advocate
Mr. Domingo Gomes, Advocate
For the Respondent:- Mr. S. Moitra
Mrs. Keya Bhattacharyya , Advocates
Judgement On: - 31st August, 2015
I.P. MUKERJI, J.
Most intriguing questions arise in these two writ applications which were heard together. They concern the employees or workmen of Kesoram Industries Limited, at the relevant point of time.
By his letter dated 5th September, 1995 the Deputy Regional Director Employees' State Insurance Corporation told the writ petitioner that the milk allowance of Rs. 2.25 per day that they were paying to each of their workmen was not to be counted as part of their wage. He also said that the wages that were being paid for work done by the workmen on holidays were to be treated as overtime and not included as a component of wage paid to them. Now, before proceeding further with the matter, I would like to say that the Employees' State Insurance Act, 1948 is a piece of beneficent legislation aimed that protecting the interest of certain categories of employees. At the relevant point of time, for being under the protection of this beneficent legislation, the aggregate wage of a workman should not have been over Rs. 3000/- per month, under Rule 50 of the Employees' State Insurance (Central) Rules, 1950 The draftsman of the Act was extremely careful in declaring the types of payment made to workmen by the employer that would constitute wage. Take for example section 2 (9) of this Act. It defines an employee. While defining various categories of employees who would fall in this class, the legislature in section 2(9) (b) made it clear that the wages, excluding remuneration for "overtime work" should not exceed the above limit. Again consider the definition of wages in section 2(22) of this Act. Wage would not include any special expenses incurred in respect of an employee considering the nature of his employment. For example, if a workman, working around the furnace of a factory is to be paid an allowance to consume glucose and salt, that would not be part of his wage as it is a special and necessary expense incurred by the employer on his employee to get a particular type of work done. According to the tone of the above letter of the Employees' State Insurance Corporation, the milk allowance was being paid by the petitioner to the employees to enable them to cope with the harsh nature of their employment. According to the employer it was a plain and simple allowance paid to the employee. It was only styled as "milk allowance".
According to the employer the extra remuneration paid to the workman for working on holidays cannot be termed as overtime, as overtime is a completely different concept. It should be more appropriately classified as a component of wage.
Now, let me turn to the facts.
By his letter dated 30th July, 1992 the Deputy Regional Director of the Employees' State Insurance Corporation wanted information from the writ petitioner whether the holiday work was in addition to the 48 hours work a week and whether the workers were entitled to holiday wages together with overtime and allowance during the same week. On 11th February, 1993 the writ petitioner gave a very logical reply to this letter by stating that the holiday work was not in addition to the 48 hours work in a week and that if the worker worked for a specified number of days in a month and was entitled to the specified number of paid holidays in which he worked, he was paid wages for the number of working days worked and the paid holidays and double the wage for working on a paid holiday.
On 8th July, 1994 an inspector attached to the ESI Corporation made his report to the effect that the milk allowance and the remuneration paid to the workers for working on paid holidays could not be termed as wages. The petitioner replied to it on 9th August, 1994. Then came the letter of the Deputy Regional Director of the Corporation dated 6th September, 1995. Challenging the said letter the first writ was filed in this court (WP No. 1992 of 1995). On 20th November, 1995, it was moved, directions for filing affidavits were made. An order of stay of the letter dated 6th September, 1995 was made. That writ application was disposed of on 24th April, 1996. The petitioner was referred to the ESI Court. The writ petitioner preferred an appeal from the said order. On 21st May, 1996, a division bench of our court stayed the learned trial court's order and said that any payment made by the petitioner would be without prejudice to the rights and contentions of the parties. On 16th May, 2002 the appeal was dismissed for default. It was restored after a long time by an order dated 9th April, 2008. On the solitary ground that the learned single Judge, after exchange of affidavits ought not to have relegated the petitioner to an alternative forum, a subsequent division bench set aside the impugned order on 15 the December, 2011 and remanded the matter back to the learned trial court for consideration. It appears from the submission of Mr. Mitra learned senior advocate for the petitioner that on 8th August 2003, whilst the appeal stood dismissed for default, the respondent corporation issued an order under section 45A of the ESI Act, 1948. This section 45A notice referred to the self-same inspection made on 8th July, 1994 and a subsequent inspection made on 26th July of that year. The subject matter of this order related to the said milk allowance and the remuneration paid to the workmen for working on paid weekly holidays. Challenging this order dated 8th August, 2003 under section 45A of the said Act the writ petitioner preferred a second writ application in this court being W.P. No. 1657 of 2003 which was moved before Justice Kundu on 18th August, 2003. Directions were made for filing of affidavits. Affidavits have been exchanged.
Both the writ applications are now before me for consideration. Before discussing the law on the subject I would like to refer to the settlement dated 25th October, 1970 between the employer and the employees. Clause-10 of the settlement provided that the workers would be required to work on paid holidays and would be paid twice the normal wages in addition to the payment for the paid holidays. By virtue of another settlement between the same parties entered into in or about September, 1988 the milk allowance being paid to the workmen was increased to Rs. 150 per day. (see clause V3 At the relevant time the workers were getting Rs. 2.25 as milk allowance). Both learned counsel rendered great assistance to the court by citing the authorities on the subject matter.
Before discussing the authorities I would like to notice the definition of wages in section 2(22) of the Employees' State Insurance Act, 1948. It includes all kinds of remuneration payable by an employer to an employee under a contract, express or implied paid at intervals not exceeding two months. It is nobody's case here that any payment made at intervals over two months is involved. Certain payments are excluded, for example, the employers' contribution to pension or provident fund, travelling allowance, any allowance paid to a person to bear certain special expenses occasioned by the nature of his employment and gratuity.
The courts in this country have progressively taken a very liberal view of the concept of wages. It includes every kind of consideration that the employee receives for the service rendered by him, except those stated above. The service may be rendered according to the contract of service in terms of the contract of service, express or implied. It may also be for some extra additional service rendered by the employee for consideration (see M/s Harihar Polyfibres v. The Regional Director E.S.I. Corporation reported in AIR 1984 SC 1680). In The Employees State Insurance Corporation, Jaipur v. M/s Shri Ram Chemical Industries, Kota reported in 1987 LAB I.C. 1747, the Rajasthan High Court said that the Life Insurance Corporation premium subsidy was to be included in wages.It would also include overtime remuneration (see Indian Drugs & Pharmaceuticals Ltd. v. Employees' State Insurance Corporation and Others reported in (1997) 9 SCC 71). According to this judgement the remuneration received for working hours and overtime constitute composite wages. Remuneration paid to an employee for working on a holiday constitutes wage as held by a division bench of the Kerala High Court in The Regional Director, E.S.I. Corporation Trichur v. Raj Cashew Co. reported in 1991 LAB I.C. 1989, in an unreported decision of the Supreme Court dated 3rd December, 1997 in Civil Appeal NO. 3851-53 of 1993 Employees' State Insurance Corporation v. Malabar Cashew & Allied Products following 1997 7 SCC 665 and by a single judge of the Karnataka High Court in ESI Corporation, Hubli v. Belgaum Milk Union reported in 2003 LAB I.C 2589] This was also held by our court in Employees State Insurance Corporation v Ramadhar Jaiswal & Ors. reported in 2004 III Labour Law Journal page 998. Any sum paid under a settlement would also be wages according to a division bench of the Kerala High Court in Carborundum Universal Limited v. Employees' State Insurance Corporation, Trichur reported in 49 FJR page 361. Now I come to the question of overtime. The above authorities lay down the proposition that the wages have to be given a very liberal meaning. While considering the wage of an employee who was covered by the Employees' State Insurance Act, 1948, the legislature, amongst other things excluded any overtime paid to him.
Hence, the main two questions before this court are whether the remuneration paid by the employer to the employee during work done during paid holidays constituted wages and whether the milk allowance paid to them also constituted wages, at the material time.
One has to first determine the nature of work popularly known as overtime and under what head the payment received for overtime is to be classified. Section 59 of the Factories Act, 1948 is as follows:-
59. Extra wages for overtime.--(1) Where a worker works in a factory for more than nine hours in any day or for more than forty-
eight 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. In my opinion, section 59 should be read with section 51 and 52 of the said Act. These sections are also set out hereunder:-
51. Weekly hours.--No adult worker shall be required or allowed to work in a factory for more than forty-eight hours in any week. 52 Weekly holidays. (1) No adult worker shall be required or allowed to work in a factory on the first day of the week (hereinafter referred to as the said day), unless-
(a) he has or will have a holiday for a whole day on one of the three days immediately before or after the said day, and
(b) the manager of the factory has, before the said day or the substituted day under clause (a), whichever is earlier,---
(i) delivered a notice at the office of the Inspector of his intention to require the worker to work on the said day and of the day which is to be substituted, and
(ii) displayed a notice to that effect in the factory:
Provided that no substitution shall be made which will result in any worker working for more than ten days consecutively without a holiday for a whole day. (2) Notices given under sub-section (1) may be cancelled by a notice delivered at the office of the Inspector and a notice displayed in the factory not later than the day before the said day or the holiday to be cancelled, whichever is earlier. (3) Where, in accordance with the provisions of sub-section (1), any worker works on the said day and has had a holiday on one of the three days immediately before it, that said day shall, for the purpose of calculating his weekly hours of work, be included in the preceding week.
Overtime is described in the Black's Law Dictionary as follows:
"Overtime.1. The hours worked by an employee in excess of a standard day or week. Under the Fair Labour Standards Act, employers must pay extra wages to certain employees for each hour worked in excess of 40 hours per week. The extra wages paid for excess hours worked."
In M/s Philips India Ltd. v. Labour Court, Madras reported in 1985 LAB IC 854 the Supreme Court interpreted overtime to mean working hours in excess of prescribed working hours. The Supreme Court opined as follows, in the context of Tamil Nadu Shops and Establishments Act, 1947.
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12. 8 hours a day and 48 hours a week constitute normal time of work at ordinary wages and any work in excess of the time prescribed for work would attract the liability to pay overtime wages.
13.************************************ Collins English Dictionary reprinted and updated in 1983 gives the meaning of the expression overtime as (i) work at regular job done in addition to regular working hours.............(iii) time in excess of a set period..........(v) beyond the regular or stipulated time
(vi) to exceed the required time for (say a photographic exposure). Webster's Third New International Dictionary gives the meaning of the expression 'overtime" as (i) time beyond or in excess of a set limit; working time in excess of a minimum total set for a given period; in excess of a set time limit or of the regular working time. Therefore, even though the expression 'overtime' is not defined in the Act, its connotation is unambiguous. In no uncertain terms it means in the context of working hours, period in excess of the prescribed working hours."
As I have discussed earlier, the concept of wages has been liberally construed by the judgements of the Supreme Court and the High Courts, as including any kind of remunerations received out of a contract or as an adhoc payment for work done outside the contract including overtime, provided it is received at an intervals of not more than two months. Now, for the purpose of adjudging the eligibility of an employee to be covered under the Employees' State Insurance Act, 1948 overtime payments have to be excluded to compute the wage of an employee. Necessarily, to have a harmonious result the definition of overtime has to be taken in a very narrow sense. It is to be confined to those payments received for extra hours of work done during the day or in a week. It should only apply to the kind of work done for a limited number of hours in a day or done for part of a day in excess of prescribed hours. It appears to be pro rata work at pro rata rates, in terms of hours, in a day or a week in excess of the prescribed period. If the extra work is done during normal working hours in a paid holiday, it has to be taken as the wages under section 2 (9) (b) of the Employees' State Insurance Act, 1948 There is nothing on record to show that the nature of the work demanded a milk supplement to maintain the health of the employees. Only, if it was so required the milk allowance was to be excluded from being considered as wages in M/s Harihar Polyfibres v. The Regional Director E.S.I. Corporation reported in AIR 1984 SC 1680, the Supreme Court has gone to the extent of saying that night shift allowance heat, gas and dust allowance will be counted as wages. Milk allowance in the circumstances of this case does not in my opinion, fall within the category of a sum paid "to defray special expenses entailed on him (employee) by the nature of his employment". For all those reasons, both the writ applications succeed. Order in terms of prayer (b), quashing the order mentioned therein and in terms of prayer (f) thereof, in the first writ application (WP No. 1992 of 1995).Order in terms of prayer (ii)quashing the order mentioned therein and order in terms of prayer
(vi) thereof in the second writ application (WP No. 1657 of 2003). Both the writ applications are accordingly allowed.
Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(I.P. MUKERJI, J.)