Case Note & Summary
This appeal by special leave arose from a dispute under the Payment of Wages Act, 1936. The appellant, representing Sasamusa Sugar Works Ltd., challenged the Patna High Court's dismissal of its writ petition, which had affirmed the payment of wages authority's finding that applications by workmen under Section 15 of the Act were competent. The core question was whether the term 'wages' defined in Section 2(vi) before its 1958 amendment included wages fixed by an industrial award. The factual background was that an Industrial Tribunal had made an award fixing the pay of employees at Rs. 2/2/- per day. In pursuance of that award, the management entered into an agreement with its workmen to give effect to the wage structure, and the agreement was published in the Bihar Gazette as part of the award. Despite this, the employer paid only As. -/10/- per day, leading the workmen to approach the payment of wages authority under Section 15, alleging illegal deduction. The employer raised two pleas: that Section 15 was inapplicable because award rates did not fall within Section 2(vi), and that the claim was barred by limitation. The authority rejected the first plea, holding Section 2(vi) includes award wages, and deferred the limitation issue as a mixed question of fact and law. The employer then filed a writ petition under Article 226 before the Patna High Court, which dismissed the petition and affirmed the authority's view. Before the Supreme Court, the appellant, through counsel M.C. Setalvad, argued that wages must be terms of the contract of employment, express or implied, and an industrial award could not be treated as such a contract; therefore, award wages were outside Section 2(vi). The Court analysed the nature of industrial adjudication, noting that industrial tribunals are not bound by existing contract terms and can revise them in the interests of social justice. When an award prescribes a new wage structure, the old contractual wage structure becomes inoperative and is replaced by the award's terms. The Court observed that the award, in substance, constitutes a fresh contract between the parties. It referred to South Indian Bank Ltd. v. A.R. Chacko, where the Court had remarked that the new contract would continue to govern relations until replaced by another contract. The Court also considered divergent High Court views: the Calcutta High Court in Jogindra Nath Chatterjee and Sons v. Chandreswar Singh had supported the employer's contention, while the Bombay High Court in Modern Mills Ltd. v. V.R. Mangalvedhkar and V.B. Godse, Manager, Prabha Mills Ltd. v. R.M. Naick had correctly interpreted Section 2(vi) to include award wages. The Supreme Court approved the Bombay view, holding that the 1958 amendment merely clarified what was already included in the unamended definition. Accordingly, the Supreme Court dismissed the appeal, confirming that Section 15 of the Payment of Wages Act was applicable to claims for award wages. The matter was remitted to the authority under the Act for disposal in accordance with law, with no order as to costs.
Headnote
A) Payment of Wages Act - Definition of Wages - Industrial Award Wages Constitute Wages - Payment of Wages Act, 1936, Section 2(vi) - The dispute concerned whether remuneration fixed by an industrial award fell within the unamended definition of wages under Section 2(vi); the employer argued that award wages were not terms of the contract of employment; the Court rejected this, holding that an award supplants the contract and becomes the new contractual term, so award wages are included in the definition; Held that even before the 1958 amendment, award wages are wages under Section 2(vi). B) Industrial Disputes - Effect of Industrial Award - Award Replaces Contractual Terms - Industrial Disputes Act, 1947, Sections 10(1), 23, 29 - Industrial adjudication has the power to revise terms of employment in the interests of social justice; when an award prescribes a new wage structure, the old contractual wage structure becomes inoperative; the award constitutes a fresh contract between parties; Held that the award's wage terms are substituted for prior contract terms and are binding.
Issue of Consideration
Whether the term 'wages' as defined by Section 2(vi) of the Payment of Wages Act, 1936 (before its 1958 amendment) includes wages fixed by an award in an industrial dispute between employer and employees.
Final Decision
The appeal was dismissed. The Supreme Court held that wages fixed by an industrial award are included in the definition of wages under Section 2(vi) of the Payment of Wages Act, 1936, even before its 1958 amendment. The matter was remitted to the authority under the Act for disposal in accordance with law, with no order as to costs.
Law Points
- Wages fixed by industrial award are included in definition of wages under Section 2(vi) of Payment of Wages Act
- 1936
- Industrial awards supplant contractual terms
- Award constitutes fresh contract between parties
- Amendment of 1958 clarified existing law
- Payment of Wages Act Section 15 applicable to award wages
- Industrial adjudication can revise terms of employment
