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2011 Supreme(Mad) 4621
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE ELIPE DHARMA RAO & THE HONOURABLE MR. JUSTICE R. SUBBIAH
Heavy Vehicles Factory Employees Union rep. By its General Secretary J. Muralitharan & Another
Versus
Union of India rep. by its Secretary to Government, Ministry of Defence & Others
Writ Petition Nos.609, 1276, 1466, 1980 to 1982, 9076 & 21035 of 2011 & Connected M.Ps.
Decided On :Decided on : 30-11-2011
For the Petitioner - M/s. Karthik Mukundan, V. Parthiban for M/s. Paul and Paul, L. Chandrakumar, Advocates.
For the Respondents - R. Suresh Kumar, S. Haja Mohideen Gisthi, Advocates, R5 – Tribunal.
The main legal point established in the judgment is the interpretation of 'ordinary rate of wages' under Section 59(2) of the Factories Act, 1948, and the requirement for proper legal authority and consultation in excluding specific allowances from the computation of overtime allowance.
Headnote:
Overtime Allowance - Interpretation of Factories Act, 1948 - Section 59(2) - 59(2) - The court discussed the interpretation of 'ordinary rate of wages' under Section 59(2) of the Factories Act, 1948, and the inclusion of various allowances for the purpose of calculating overtime wages. The court highlighted the exclusion of specific allowances such as house rent allowance and transport allowance from the definition of 'ordinary rate of wages' and emphasized the legal provisions governing the computation of overtime allowance.
Fact of the Case:
The employees working in a factory challenged the exclusion of certain allowances from the computation of overtime allowance under the Factories Act, 1948. The Tribunal dismissed their original applications based on the interpretation of Section 59(2) of the Act.
Finding of the Court:
The court found that the exclusion of allowances from the definition of 'ordinary rate of wages' without proper legal authority and consultation was illegal and unsustainable. It held that the action of the first respondent and the order of the Tribunal were not in accordance with the legal provisions of the Factories Act, 1948.
Issues: The key issue was the interpretation of Section 59(2) of the Factories Act, 1948, and the legality of excluding specific allowances from the computation of overtime allowance.
Ratio Decidendi: The court's decision was based on the interpretation of the legal provisions under Section 59(2) of the Factories Act, 1948, and the lack of proper authority and consultation in excluding allowances from the definition of 'ordinary rate of wages'.
Final Decision: The court set aside the order passed by the Tribunal and allowed the writ petitions, emphasizing that the exclusion of allowances without proper legal authority was illegal and unsustainable.
ELIPE DHARMA RAO,J.
1. As the issue involved in the all the writ petitions are one and the same, the following common order is passed.
2. The first petitioner in the above writ petitions are the registered and recognized Union/Association representing various categories of employees, who are working in the third respondent establishment and the second petitioner in the above writ petitions are the members of the said Union.
3. It is the case of the employees, who are working under the third respondent establishment, that they have all along been in receipt of overtime allowances whenever they are detained for duty beyond the normal working hours of 48 hours in a week, and the said allowance has been calculated and computed by including all allowances admissible to the employees like House Rent Allowance, City Compensatory Allowance, Transport Allowance, Small Family Allowance etc., as per the provisions of the Factories Act, 1948, since the third respondent factory is governed by the said Act. It is also the case of the employees that while so, the first respondent issued a memorandum, dated 26.06.2009 stating that House Rent Allowance, Travelling Allowance and Small Family Allowance would stand excluded for the purpose of computation of overtime allowance without assigning any reason therein for exclusion of the same. Aggrieved by the said order, the employees and the Union/Association have filed original applications before the Central Administrative Tribunal.
4. The Tribunal, on consideration of the facts and circumstances of the case, dismissed the original applications, as per common order, dated 24.12.2010, by holding that when a specific clarification is make in provision 2 of Section 59, about the term "ordinary rate of wages", the applicants cannot contend that the allowances include HRA, TA and other allowances and there is no reason to hold that the term allowance includes all allowances, viz., HRA, TA etc., which is not the intention of the legislature while incorporating the relevant provisions. Aggrieved by the said order, the Union/Association as well as the employees have filed the above writ petitions.
5. Heard the learned counsel for the petitioners and the learned counsel for the respondents 1 to 4.
6. The learned counsel for the petitioners contended that the Sub Section 2 of Section 59 excludes only two elements, viz., bonus and wages for overtime work and includes all other allowances for the purpose of calculating overtime wages and the Tribunal, without appreciating the aforesaid provision, dismissed the original applications, which is incorrect and unsustainable.
7. The learned counsel for the petitioners, in support of the aforesaid contention, have relied on the provisions of Sub Section 2 of Section 59 of the Factories Act, 1948, which states that "ordinary rate of wages means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of food grains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work".
8. The learned counsel for the petitioners also placed reliance on the decision of the Honble Supreme Court reported in GovindBapu Salvi and others -vs- Vishwanath Janardhan Joshi (1995 Supp(1) SCC 148), wherein the Honble Supreme Court, while interpreting Section 59 of the Factories Act, held that, admittedly, the appellants are not entitled to the payment of the house rent allowance, since they are in occupation of the official quarters and hence, for calculating the overtime wages, the house rent allowance cannot be taken into account and what Section 59(2) contemplates is the eligibility to the payment of the house rent allowance and the service conditions envisage employees who are and who are not provided with the official accommodation and provide for house rent allowance only to those who are not provided with the accommodation and
