The Management of Senthil Motor Service,Tiruppur v. Deputy Commissioner of Labour, Coimbatore

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED:- 06.03.2009CORAM:THE HONOURABLE MR. JUSTICE K.CHANDRUW.P.No.17492 of 1999The Management of Senthil Motor Service,Tiruppur ...Petitioner.Vs.1. Deputy Commissioner of Labour, Coimbatore. (Appropriate authority under the Minimum Wages Act)2. A.Rajendran 432, P.N.Road, Tiruppur. ...RespondentsPetition filed under Article 226 of the Constitution of India toissue a writ of Certioriari to call for the records and quash theorder dated 25.6.1999 made in M.W.I.A.No.61 of 1998 on the file ofthe 1st respondent. For Petitioner : Mr.Ravi for M/s.Gupta & RaviFor Respondent No1. : Ms.Sneha,G.A.For Respondent No.2 : Mr.S.Ayyadurai O R D E RThe writ petition is filed by the Management of a TransportUndertaking against the order passed by the first respondent(Competent Authority under the Minimum Wages Act) in M.W. ApplicationNo.61/1998. By the said order, the first respondent directed paymentof difference in wages to the second respondent for the period from1993 to 1997. For the earlier period, it gave liberty to the secondrespondent to file appropriate application with supporting documents. 2. The writ petition was admitted on 29.10.1999. This Court alsogranted an interim order with a condition that the petitioner deposita sum of Rs.23,250/- with the first respondent. Subsequently, by anorder dated 12.6.2000, the second respondent was permitted towithdraw 50% of the amount deposited with the first respondent. Once https://hcservices.ecourts.gov.in/hcservices/ again, when the matter came up on 17.1.2001, this Court modified theearlier order and permitted the balance amount lying with theCommissioner to be withdrawn, since only 50% of the amount wasinitially directed to be deposited by order of this Court. 3. The learned counsel for the petitioner Mr.Ravi submitted thatthe order of the Commissioner is contrary to law and he has nojurisdiction to compute the said amount. He also submitted that forarriving at minimum wages, he has to confine himself to the term'wages' found under Section 2(h) of the Minimum Wages Act 1948 whichdefines the term 'wages'. In the said definition, there are severalexceptions. Therefore, the first respondent, by not including thecollection batta, in the payment made to the second respondent whilecalculating the minimum wage, was illegal. He also submitted thatthe collection batta ought to have been included for calculating thewages. Alternatively, he submitted that the second respondent Unionhad entered into a Settlements under Sections 18(1) as well as 12(3)of the Industrial Disputes Act where they have agreed to pay minimumwage in accordance with the Notification prescribed by the Governmentin relation to employment in Motor Transport Undertakings. He alsosubmitted that where there was any lesser payment, the total amountpaid to the petitioner will have to be calculated. Only if it isfound that the total pay is less than the minimum wage, the questionof calculating the difference in wages will arise. 4. Learned counsel placed reliance upon the judgment of theSupreme Court in Town Municipal Council v. Presiding Officer, LabourCourt, Hubli & others reported in (1970)1 SCR 51. He placed relianceupon the following passage. The purpose of Section 20(1) seems to be to ensure that therates prescribed under the Minimum Wages Act are compliedwith by the employer in making payments and, if any attemptis made to make payments at lower rates, the workmen aregiven the right to invoke the aid of the Authorityappointed under Section 20(1). In cases where there is nodispute as to rates of wages, and the only question iswhether a particular payment at the agreed rate in respectof minimum wages, overtime or work on off-days is due to aworkman or not, the appropriate remedy is provided in thePayment of Wages Act. If the payment is withheld beyond thetime permitted by the Payment of Wages Act even on theground that the amount claimed by the workman is not due,or if the amount claimed by the workman is not paid on theground that deductions are to be made by the employer, theemployee can seek his remedy by an application underSection 15(1) of the Payment of Wages Act. In cases whereSection 15 of the Payment of Wages Act may not provideadequate remedy, the remedy can be sought either underSection 33-C of the Act or by raising an industrial dispute https://hcservices.ecourts.gov.in/hcservices/ under the Act and having it decided under the variousprovisions of that Act. In these circumstances, we areunable to accept the submission made by Mr. Sen on behalfof the appellant that Section 20(1) of the Minimum WagesAct should be interpreted as intended to cover all claimsin respect of minimum wages or overtime payment or paymentfor days of rest even though there may be no dispute as tothe rates at which those payments are to be claimed. It istrue that, under Section 20(3), power is given to theAuthority dealing with an application under Section 20(1)to direct payment of the actual amount found due; but this,it appears to us, is only an incidental power granted tothat Authority, so that the directions made by theAuthority under Section 20(1) may be effectively carriedout and there may not be unnecessary multiplicity ofproceedings. The power to make orders for payment of actualamount due to an employee under Section 20(3) cannot,therefore, be interpreted as indicating that thejurisdiction to the Authority under Section 20(1) has beengiven for the purpose of enforcement of payment of amountsand not for the purpose of ensuring compliance by theemployer with the various rates fixed under that Act. Thisinterpretation, in our opinion, also harmonises theprovisions of the Minimum Wages Act with the provisions ofthe payment of Wages Act which was already in existencewhen the Minimum Wages Act was passed."5. Learned counsel also placed reliance upon the judgment of theSupreme Court in (Air Frieght Ltd. V. State of Karnataka and others)reported in 1999(4) LLN 395. He placed reliance upon the followingpassage."It is one pay package. Neither the scheme nor anyprovisions of the Act provides that the rates of minimumwages are to be split up on the basis of the cost of eachof the necessities taken into consideration for fixing thesame. Hence, in cases where employer is paying total sumwhich is higher than the minimum rates of wages fixed underthe Act including the cost of living index (variabledearness allowance), he is not required to pay variabledearness allowance separately. However, that higher wagesshould be calculated as defined in Section 2(h) of the Act.Section 2(h) specifically provides that the value of thefollowing items are not required to be computed for findingout whether employer pays minimum wages as prescribed underthe Act:(i)the value of any house, accommodation, supply oflight, water, medical care, or any other amenity or anyservice excluded by general or special order of theappropriate Government; https://hcservices.ecourts.gov.in/hcservices/ (ii)any pension fund or provident fund or under anyscheme of social insurance;(iii) any travelling allowance or the value of anytravelling concession;(iv)any sum paid to any person employed to defrayspecial expenses entailed on him by the nature of hisemployment; or(v)any gratuities payable on discharge.But while deciding the question of payment of minimumwages, the Competent Authority is not required to bifurcateeach component of the costs of each item taken intoconsideration for fixing minimum wages, as lump sum amountis determined for providing adequate remuneration to theworkman so that he can sustain and maintain himself and hisfamily and also preserve his efficiency as a worker.Dearness allowance is part and parcel of cost ofnecessities. In cases where the minimum rates of wages islinked up with variable dearness allowance, it would notmean that it is a separate component which is required tobe paid separately where the employer pays a total paypackage which is more than the prescribed minimum rate ofwages.In the result, it is held that:(1) The appellant-company would be covered by theexpression “shops” and/or “commercial establishment” as itis carrying out various systematic commercial activitieswith profit motive and also it sells services on a retailbasis.(2) The notification issued under the Act prescribingminimum wages, applies to all kinds of shops and commercialestablishments — big or small — and that payment of morethan the prescribed minimum rates of wages is not relevantfor deciding its applicability. It cannot be stated that asthey are paying more than the prescribed minimum wages, theAct or notification would not be applicable. Fordetermining whether they are paying minimum rates of wagesor not, the amount paid for the value of items which areexcluded under Section 2(h) of the Act is not to be takeninto consideration.(3) Minimum rates of wages fixed under the Act isremuneration payable to the worker as one package of fixedamount. In cases where minimum wage is linked with the costof living index, the amount paid on the basis of dearnessallowance is not to be taken as an independent component of https://hcservices.ecourts.gov.in/hcservices/ the minimum wages but as part and parcel of the process ofcomputing the rates of minimum wages which is to bedetermined after taking into consideration the cost ofvarious necessities.In this view of the matter, the order passed by the HighCourt holding that the State Government has fixed twoseparate categories of minimum rates of wages to be paid tothe employees — one basic and the other “other allowance”,that is, dearness allowance, is erroneous and is set aside.The matter is remanded to the Labour Officer (the CompetentAuthority under the Minimum Wages Act) for fresh decisionin accordance with law. The appeal is allowed to theaforesaid extent with no order as to costs.6. Learned counsel also brought to the notice of this Court, thejudgment of the Bombay High Court in Harilal Jechand Doshi GhatkoparHindu Sabha Hospital V. Maharashtra General Kamgar Union and anotherreported in 1999(4) L.L.N. 899. He placed reliance upon the followingpassage found in the decision:"15. Sri Bukhari also drew my attention to the caseof Chairman of Madras Port Trust V. Claims Authority(A.I.R. 1957 Mad. 69), wherein it was held by the MadrasHigh Court that what the employee is entitled to is thewages and the scheme of the Minimum Wages Act is to providefor a minimum wage for each employee. It further also laysdown that the Act provides for a payment of a minimum. Solong as that minimum is paid, the contractual wage-structure is left unaffected and the component parts ofwages could still be regulated by contract between theemployer and employee and that definition of wagespostulates a contractual basis, express or implied. If thecontract rate of wages is higher, the statutory right andobligation do not come into play. It was also held that ifthe wages paid to the concerned workmen under various headsof monthly wages, dearness allowance, house rent allowance,etc., exceeded the minimum rate of wages fixed under theAct the employer could not be held guilty of contraveningthe notification though a particular component of the wage-structure, viz., dearness allowance, was at a rate lowerthan the one fixed under that Act........19. It is thus clearly seen that S.4(1) of the Actprovides for the minimum rate which could consist ofcomponent parts. Section 4(1) does not postulate differentminimum for the several components – nor can each suchminimum constitute the minimum rate of wages within the https://hcservices.ecourts.gov.in/hcservices/ meaning of S.4(1). If the employer has paid the totalwages more than the minimum rate of wages within themeaning of S.4(1), there cannot be any contravention of theprovisions of the Act. In the instant case, the minimumwages comprises of two component parts, namely, basic wageand dearness allowance. It is not disputed that theemployee in the present case has been paid the wages underboth the component parts and the total amount paid to theemployee is higher than the minimum wages prescribed underthe notification. Under the circumstances, it cannot besaid that the employer has contravened the provisions ofthe Minimum Wages Act." 7. Per contra, Mr.Ayyadurai, the learned counsel for the secondrespondent stated that the authority under Section 20(1) of theMinimum Wages Act is empowered to compute the shortfall in minimumwage and placed reliance upon the judgment of the Division Bench ofthe Andhra Pradesh High Court in Subbarao (S.) V. Authority underMinimum Wages Act, Guntur Region and others reported in 1987 (II)L.L.N. 50. He placed reliance upon the following passage. "We have carefully gone through the Full Bench decisionof this High Court cited before us. In that case also, thequestion whether the Authority appointed under S.20(1),Minimum Wages Act, would have jurisdiction to entertain aclaim of alleged payment of wages less than the rates fixedunder the Act did not directly arise for consideration. Theissue before the Court was whether an application underS.33C(2), Industrial Disputes Act, could be entertained bythe Labour Court, without directing the employee to have theclaim first adjudicated by an Industrial Tribunal, in viewof the fact that the amount had already been fixed underS.10, Payment of Bonus Act, creating a statutory right infavour of the employee. In our opinion, the Full Benchdecision also does not advance the case of the appellant."8. In the present case, the first respondent very correctly heldthat the daily batta as part of the wage cannot be taken intoaccount. In fact, a reading of Section 2(h) of the Minimum Wages Act,the term 'wages' does not show the inclusion of daily batta in themain part of the definition. The employer cannot state that thepayment of daily batta is a part of the wage. The decision cited bythe learned counsel for the management has no direct bearing on thepresent case. 9.The Supreme Court in the judgment of Manganese Ore (India)Limited vs. Chandilal Saha reported in 1991 Supp (2) SCC 465 inparagraph 15 dealt with the definition of the term 'minimum wage'found in the Minimum Wages Act which reads as follows: https://hcservices.ecourts.gov.in/hcservices/ "15. As regards the attendance bonus it was an additionalpayment made to the workmen as a means of procuring theirregular attendance with the ultimate object of increasingproduction. The bonus was in the nature of extraremuneration for regular attendance. The said bonus was notpayable to all the workmen at the time of joining theemployment. It was payable to a workman who had put incontinuous service for a specified period and who was loyalto the management. The attendance bonus was only anincentive and it was not a wage. There is a basicdifference between the incentive bonus and the minimumwage. Every workman is entitled to the minimum wage fromthe very first day of his joining the employment whereasthe bonus has to be earned and it becomes payable “afterthe event”. In the present case the attendance bonus waspayable after regular attendance for a specified period andremaining loyal to the management. The scheme of payment ofattendance bonus was thus an incentive to secure regularattendance of the workmen. It was an additional paymentmade to the workmen as a means of increasing production. InTitaghur Paper Mills Co. Ltd. v. Its Workmen1 this Courtheld that the payment of production bonus is in the natureof an incentive and is in addition to the wages. We are,therefore, of the view that the attendance bonus is in thenature of an incentive and it cannot be treated as part ofthe minimum wages fixed under the Act.10. Therefore, this Court does not find any illegality in theorder passed by the first respondent who is the Authority under theMinimum Wages Act. Hence, the writ petition stands dismissed. Nocosts. However, the first respondent is directed to pay the balanceamount to the second respondent within a period of eight weeks fromthe date of receipt of a copy of this order.sd/-Asst.Registrar/true copy/Sub Asst.RegistrarvsiTo The Deputy Commissioner of Labour, Coimbatore. W.P.No.17492 of 1999KA (CO)GSK 09.03.2009.