1. Recovery of gratuity under an industrial award through the Authority under the Payment of Wages Act, 1936 — interpretation of Section 2(vi)(d). (Para 1 , 2 )
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1965 Supreme(SC) 268
SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, M. HIDAYATULLAH AND V. RAMASWAMI, JJ.
Purshottam H. Judye and others, Appellants
Versus
V. B. Potdar, the Authority appointed under the Payment of Wages Act and another, Respondents.
Civil Appeal No. 464 of 1963.
Advocates appeared
M/s. S. B. Naik, K. Rajendra Chaudhuri and K. R. Chaudhuri, Advocates, for Appellants (Nos. 1, 2, 4-7, 9-13, 15-17 and 19-34); Mr. S.V. Gupte, Solicitor-General of India, (Mr. B. R. Agarwala, Advocate, and Mr. H. K. Puri, Advocate, for M/s. Gagrat and Co., with him), for Respondent No. 2.
Advocates:
B.R.AGRAWAL, H.K.PURI, S.V.Gupta
B.R.AGRAWAL, H.K.PURI, S.V.Gupta
The term "instrument" in Section 2(vi)(d) of the Payment of Wages Act, 1936, includes awards made by Industrial Courts, rendering gratuity payable under such awards as "wages" recoverable through the Authority appointed under the Act.
Headnote:(A) Payment of Wages Act, 1936 - Section 2(vi)(d) and Section 2(vi)(6) - Definition of "wages" - Recovery of gratuity - Whether gratuity payable under an award passed by an Industrial Tribunal falls within the definition of "wages" - The definition of "wages" is inclusive and intended to be wide - Sub-clause (6) excludes gratuity other than those specified in sub-clause (d), implying that certain categories of gratuity are included in sub-clause (d) - While an award is not a "law" or a "contract" in the strict sense, the term "instrument" in sub-clause (d), when read in the context of the legislative intent to widen the scope of the definition, includes awards made by Industrial Courts of competent jurisdiction (Paras 6, 7, 11 and 12).
Facts of the case:
Former employees of a company applied to the Authority appointed under the Act for the recovery of gratuity due to them under an award passed by an Industrial Tribunal. The employer raised a preliminary objection, contending that the amounts claimed were not "wages" within the meaning of Section 2(vi)(d) of the Act. The Authority rejected this contention, but the High Court reversed the finding, holding that the applications were incompetent as an award does not constitute an "instrument" under the Act.
Findings of Court:
The High Court erred in adopting a narrow construction of the word "instrument". In light of the 1957 amendment intended to widen the scope of the definition of "wages", and considering that remuneration and bonuses payable under awards are included, the word "instrument" must be interpreted comprehensively to include awards made by Industrial Courts.
Issues: Whether the claim made by employees for payment of gratuity due to them under an industrial award falls within the definition of "wages" under Section 2(vi)(d) of the Payment of Wages Act, 1936.
Ratio Decidendi: The term "instrument" in Section 2(vi)(d) of the Act, when interpreted in the context of the general object of the amended definition and read with the exclusion in sub-clause (6), includes awards made by Industrial Courts. It would be unreasonable to allow the recovery of a bonus claimable under an award while denying the recovery of gratuity claimable under an award through the same Authority.
Result: Appeal allowed.
Legal Category Hierarchy
- labour and industrial law
- statutory interpretation
Table of Contents
2. Whether gratuity payable under an industrial award constitutes wages within the meaning of Section 2(vi)(d) of the Payment of Wages Act, 1936. (Para 3 , 4 )
3. Analysis of the inclusive definition of wages and the broad interpretation of the term instrument to include industrial awards in line with legislative intent. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 )
4. The term instrument in Section 2(vi)(d) of the Payment of Wages Act, 1936, includes awards made by Industrial Courts of competent jurisdiction. (Para 11 , 12 )
5. Appeal allowed — High Court decision reversed and the Authority's finding on competence restored. (Para 13 , 14 )
6. Does gratuity payable under an industrial award fall within the definition of wages under the Payment of Wages Act, 1936?
Yes, provided it is payable by reason of termination of employment and falls under the category of a sum payable under an instrument, as industrial awards are considered instruments. (Para 11 , 12 )
7. Does an industrial award constitute a law or a contract for the purposes of Section 2(vi)(d) of the Payment of Wages Act, 1936?
No. While an award is enforceable by law and may modify contractual terms, it is neither a law nor a contract within the meaning of the relevant sub-clause. (Para 9 , 10 )
8. How should the term instrument be interpreted in the context of Section 2(vi)(d) of the Payment of Wages Act, 1936?
The term should be interpreted broadly, beyond documents executed between parties, to include awards by Industrial Courts, reflecting the legislative intent to widen the scope of wages. (Para 11 , 12 )
Judgement
GAJENDRAGADKAR, C.J.I. : The short question of law which arises in this appeal is whether workmen are entitled to apply to the Authority appointed under the Payment of Wages Act, 1936 (No. 4 of 1936) (hereinafter called the Act ) for the recovery of the amount of gratuity due to them under an award passed between them and their employer. This question has been answered by the Bombay High Court in the negative and the appellants, Purshotam. H. Jadye and 34 others, who have come to this Court with a certificate granted by the said High Court, contended that the view taken by the High Court is not justified on a fair and reasonable construction of S. 2 (vi) (d) of the act. Respondent No. 1 is Mr. V. B. Potdar, the Authority appointed under the Act, whereas respondent No. 2, the Bombay Chronicle Co. Private Ltd., is the employer of the appellants.
2. Respondent No. 2, a company having its registered office at Red House, Horniman Circle, Fort, Bombay, were the printers and publishers of the Bombay Chronicle , an English Daily, which used to be published in Bombay until the 5th April 1959. On that day, the paper discontinued its publication. The appellants are the former employees of respondent No. 2. In a reference made to the Industrial Tribunal, Bombay, under the Industrial Disputes Act, an award was pronounced by the said Tribunal on the 28th September 1949, framing a scheme of gratuity payable to the appellants. This award directed respondent No. 2 to pay gratuity to the appellants on terms and conditions prescribed by it. It appears that respondent No. 2 terminated this award on the 29th February 1952. After the Bombay Chronicle ceased publication, the appellants moved respondent No. 1 under the Act by several applications for payment of the gratuity due to them. These applications were made in July and August 1959.
3. Respondent No. 2 raised a preliminary objection against the competence of the appellants applications. It was urged on its behalf that the amounts claimed by the appellants were not wages within the meaning of S. 2 (vi) (d) of the Act and as such the applications were incompetent. Respondent No. 1 has rejected the contention raised by respondent No. 2, and has held that the applications made by the appellants were competent and he had jurisdiction to deal with them on the merits.
4. Respondents No. 2 then moved the Bombay High Court by a special civil application No. 1285/1960 under Arts. 226 and 227 of the Constitution. It was urged before the High Court by respondent No. 2 that the view taken by respondent No. 1 about the competence of the applications made by the appellants before him was contrary to law. This plea has been upheld by the High Court with the result that the finding recorded by respondent No. 1 on the question about the competence of the applications made by the appellants has been reversed and the applications themselves have been ordered to be dismissed. It is this finding which is challenged before us by Mr. Naik on behalf of the appellants. The question thus raised for our decision lies within a very narrow compass. Does the claim made by the appellants for payment of gratuity due to them under an award fall within S. 2 (vi) (d) of the Act?
5. It is well known the Act was passed in 1936 to regulate the payment of wages to certain classes of persons employed in industry. The object of the Act obviously was to provide a cheap and speedy remedy for employees to whom the Act applied, inter alia, to recover wages due to them, and for that purpose, a special Tribunal has been created. Section 15 provides for making such applications and it prescribed the manner and method in which the applications have to be tried. Section 2 (vi) defines wages thus:-
"wages" means all remuneration (whether by way of salary, allowances or other wise) expressed in terms of money or capable of being so expressed which would, it the terms of employment, express or implied, were fulfilled, be payable to a pers
