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Macneil And Magor Ltd. v. First Additional Labour Court, Madras Ors.
Factual and Procedural Background
This writ petition challenges an award directing reinstatement of the second respondent (workman) with continuity of service and back wages. The writ petition was admitted on 10 November 1994 and an interim stay was granted by this Court. The second respondent filed two petitions: (a) Writ Miscellaneous Petition No. 32907 of 1994 seeking vacation of the interim stay and (b) Writ Miscellaneous Petition No. 32908 of 1994 under S. 17-B of the Industrial Disputes Act seeking directions for payment of wages pending the proceedings. The management (writ petitioner) accepts entitlement under S. 17-B but disputes the correct quantum of wages payable during the pendency of the writ petition.
Legal Issues Presented
- Whether the second respondent is entitled to relief under S. 17-B of the Industrial Disputes Act (this was not disputed by the management).
- What is the correct measure/quantum of "full wages last drawn" payable under S. 17-B during the pendency of the writ petition — i.e., whether that expression refers to wages as on the date of dismissal/termination or wages as would be payable pursuant to the award (effectively wages as on the date of the award, including permissible increases).
- Whether the interim stay granted by this Court should be vacated and, if not, on what conditions (including deposits and payment arrangements) the stay should be made absolute.
Arguments of the Parties
Petitioner's (Management's) Arguments
- Presented by Sri Vijayanarayan, learned Advocate for the petitioner.
- Admitted that S. 17-B applies but contended that "full wages last drawn" means the wages last drawn on the date of dismissal — i.e., the pay-scale prevailing at the time of removal. Specifically, the management stated that the workman was drawing Rs. 1,373.50 per month when removed and that this should be the amount payable during the pendency of proceedings.
- Relied on a plain reading of S. 17-B as supporting that the employer's liability is limited to wages last drawn at time of dismissal.
Second Respondent's (Workman's) Arguments
- Presented by Miss Vaigai, learned counsel for the second respondent/workman.
- Contended that entitlement under S. 17-B should be determined with reference to the date of the award: if the workman would have continued in service, the wages payable on the date of the award (claimed at Rs. 3,091 per month) should form the basis for payment during the pendency of the writ petition.
- Relied on authorities (Bombay High Court decision and a Supreme Court decision cited in the opinion) and an earlier order of this Court to support the proposition that "full wages last drawn" means wages as would be payable pursuant to the award (i.e., as on date of award, inclusive of permissible increases up to that date).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Visveswaraya Iron and Steel Ltd. v. M. Chandrappa & Anr., 1993 II CLR 124 (Karnataka High Court) | Cited by the petitioner to support the view that employer liable only to pay "full wages last drawn" meaning wages according to the pay-scale prevailing on the date of removal of the workman. | The Court described how this decision was considered in subsequent authorities and contrasted the Karnataka Division Bench's observations with the Bombay High Court's treatment; the Court did not adopt the restricted interpretation attributed to this decision but addressed the Karnataka decision through the lens of the Bombay High Court's critique. |
| Carona Sahu Company Ltd. v. Abdul Kafim Munafkhar & Ors., 1994 II CLR 445 (Bombay High Court) | Held that "full wages last drawn" should be interpreted to refer to the wages the workman would be entitled to pursuant to the award (i.e., wages payable on the date of the award) and that Parliament introduced S.17-B to prevent deprivation of such wages due to delay from challenges to the award. | The Court relied on this decision as supporting its conclusion that "full wages last drawn" means the full wages which the workman was entitled to draw pursuant to the award and which would include increases permissible up to the date of the award. |
| Bharat Singh v. New Delhi Tuberculosis Centre New Delhi & Ors., 1986 I CLR 414 (Supreme Court) | Invoked by the workman's counsel to demonstrate the applicability of the newly introduced S. 17-B to awards of Labour Court and Tribunal. | The Court noted the Supreme Court decision as supporting the applicability of S.17-B to awards of Labour Court and Tribunal; it formed part of the authorities considered in construing the section. |
| Order of this Court in Writ Misc. Petns. Nos. 17823, 22661 and 22662 of 1994 in W.P. No. 11781 of 1994 dated 27 October 1994 | Referred to for the proposition that the quantum of last drawn wages shall be on the basis of wages payable to the workman on the date of the award. | The Court recorded that the earlier order was placed before it and that it aligned with the view adopted by the Court — i.e., to treat the quantum on the basis of wages payable on the date of the award. |
| Industrial Disputes (Amendment) Act, 1982 (introduction of S. 17-B) | Statutory amendment introduced S. 17-B to ensure payment of wages last drawn to workmen during delays caused by challenges to awards, to avoid hardship to workmen. | The Court relied on the stated object of the amendment (as set out in the statement of objects) to support a purposive interpretation of "full wages last drawn" in favour of the workman. |
Court's Reasoning and Analysis
The Court began by noting that the management did not dispute applicability of S. 17-B but contested the method of calculating the quantum of wages payable during the pendency of the writ petition. The central interpretive question was the meaning of the expression "full wages last drawn" in S. 17-B.
The Court examined the plain words of S. 17-B (as recited in the opinion) and considered the competing interpretations advanced by counsel: (a) the management's submission that the phrase refers to wages last actually drawn by the workman on the date of dismissal (i.e., the pay-scale at removal), and (b) the workman's submission that the phrase should be understood with reference to the date of the award — i.e., wages the workman would have been drawing pursuant to the award (including increments and dearness allowance and other permissible increases up to the date of the award).
The Court reviewed authorities placed before it. It gave particular weight to the Bombay High Court decision in Carona Sahu Company Ltd., which interpreted S. 17-B purposively, holding that Parliament intended that a workman should not be deprived of wages that would have been payable had the award been implemented. The Court also examined how the Karnataka High Court decision had been described and distinguished by the Bombay High Court, noting that the Karnataka Division Bench had made observations about the limits of what "full wages last drawn" would include, but that the Bombay High Court interpreted the provision more broadly to include increments and dearness allowance up to the date of the award (and the Court considered the latter reasoning to be correct).
The Court further considered the legislative history: S. 17-B was introduced by the Industrial Disputes (Amendment) Act, 1982, and the statement of objects shows Parliament intended to prevent hardship caused by delay in implementation of awards challenged in higher courts. Taking the statutory text together with that purpose and the authorities, the Court concluded that "full wages last drawn" means the full wages which the workman was entitled to draw pursuant to the award — i.e., the wages as would be payable on the date of the award, inclusive of permissible increases during the interregnum between dismissal and reinstatement.
On the practical side, the Court fashioned an order seeking to balance interests of both parties: it modified the interim stay conditions to require a substantial deposit (75% of back wages) into court-controlled funds with verification and investment arrangements, while directing payment of the remaining 25% to the workman. It then ordered payment of "last drawn wages" from the date of the writ petition (10 November 1994) until disposal, with a schedule for arrears and subsequent monthly payments — all subject to the ultimate result of the writ petition.
Holding and Implications
HOLDING: The Court held that the expression "full wages last drawn" in S. 17-B of the Industrial Disputes Act means the full wages which the workman was entitled to draw pursuant to the award — that is, the wages payable to the workman on the date of the award, inclusive of permissible increases (such as yearly increments and dearness allowance) up to that date.
The Court ordered the following specific relief and procedures (direct effects on the parties):
- The interim stay granted earlier is made absolute on the condition that the writ petitioner deposits 75% of the back wages to the credit of Industrial Dispute No. 511 of 1988 with the first respondent within eight weeks from the order; the first respondent is to verify the correctness of the back wages and, on deposit, invest the sum in a nationalised bank with monthly interest to be paid to the second respondent.
- The remaining 25% of the back wages must be paid by the petitioner to the second respondent within eight weeks from the order.
- Under S. 17-B, the writ petitioner is directed to pay the last drawn wages from the date of the writ petition (10 November 1994) until the disposal of the writ petition. Arrears from 10 November 1994 until the end of January 1995 must be paid on or before 31 March 1995; thereafter last drawn wages shall be paid on or before the 10th of the succeeding month. All payments are subject to the ultimate result of the writ petition.
- The quantum of "last drawn wages" to be paid under S. 17-B shall be calculated on the basis of the wages payable to the workman on the date of the award.
Implications: The decision resolves the interpretive dispute in this case by adopting the view that "full wages last drawn" encompasses wages as would be payable pursuant to the award (i.e., as on the date of the award, including permissible increases up to that date). The opinion does not state that it is laying down a new binding precedent beyond its application to the case at hand; the order implements that interpretation through conditional stay relief and payment directions affecting the parties' immediate rights.
1. The writ petition is directed against the award directing reinstatement of the second respondent with continuity of service and back wages. The writ petition was admitted on 10 November 1994 and interim stay was granted. The second respondent/workman has now come with a petition Writ Miscellaneous Petition No. 32907 of 1994 to vacate the interim stay and also a petition Writ Miscellaneous Petition No. 32908 of 1994 under S. 17-B of the Industrial Disputes Act for a direction.
2. Heard the learned Advocates on both sides. It is not disputed before me by the learned Advocate for the petitioner in the writ petition on behalf of the management that the workman/second respondent is entitled to relief under S. 17-B of the Industrial Disputes Act, but the controversy is to what should be the quantum of wages payable to the workman during the pendency of the writ petition in this Court. It was contended on behalf of the management that when the workman was removed from service he was drawing Rs. 1,373.50 as salary per month and that should be the amount payable during the pendency of the proceedings. On the other hand, it was claimed on behalf of the second respondent/workman that entitlement of wages should be determined with reference to the date of award and in case the workman would have continued in service, then the wages payable on the date of the award were Rs. 3,091 per month, and on that basis this Court should direct the management/petitioner to pay the amount to the workman/respondent 2 to have the benefit of stay.
3. Sri Vijayanarayan, learned Advocate for the petitioner in the writ petition, submitted that the plain reading of provisions of S. 17-B of the Industrial Disputes Act makes it clear that the workman is entitled to full wages last drawn by him and those wages were one which were paid to the workman on the date of dismissal. He invited my attention to S. 17-B of the Act. Section 17-B of the Act reads as follows :-
"17-B. Payment of full wages to workman pending proceedings in higher Court : Where in any case a Labour Court, Tribunal or National Tribunal by an award directs reinstatement of any workman and the employer prefers any proceedings against such award in a High Court or the Supreme Court, the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the High Court or the Supreme court, full wages last drawn by him, inclusive of any maintenance allowance admissible to him under any rule if the workman had not been employed in any establishment during such period and an affidavit by such workman had been filed to that effect in such Court :
Provided that where it is proved to the satisfaction of the High Court or the Supreme Court that such workman had been employed and been receiving adequate remuneration during any such period or part thereof, the Court shall order that no wages shall be payable under this section for such period or part, as the case may be".
4. He has cited a decision of the Karnataka High Court in Visveswaraya Iron and Steel, Ltd. v. M. Chandrappa & Anr. 1993 II CLR 124, and pointed out that if the management wants to have the award, which directs reinstatement stayed during the pendency of the proceedings before this Court, it is liable only to pay the full wages last drawn, meaning thereby the wages according to the pay-scale that was prevailing on the date of removal of the workman.
5. On the other hand, Miss. Vaigai, learned counsel appearing for the second respondent/workman, submitted that the decision of the Karnataka High Court is supporting here contention and she placed reliance on Para 7, at Page 125 of the said judgment which reads as follows :
"Though in S. 17-B of the Act the words 'from the date of the award' are not found, having regard to the objects and reasons stated for inserting this provision, we can, without any difficulty, come to the conclusion that the date from which the full wages last drawn to be paid should be from the date of the award till the disposal of the proceedings".
She has further cited a decision of the Bombay High Court in Carona Sahu Company Ltd. v. Abdul Kafim Munafkhar & Ors. 1994 II CLR 445, and submitted that entitlement of wages should be determined with reference to the date of the award and in case the workman would have continued in service then the wages payable on the date of the award were to be taken into consideration. The learned Advocate also placed reliance on a decision of the Supreme Court in Bharat Singh v. New Delhi Tuberculosis Centre New Delhi & Ors. 1986 I CLR 414, to impress on the Court the applicability of newly introduced provision, S. 17-B of the Act to awards of Labour Court and Tribunal. An order passed by this Court in Writ Miscellaneous Petitions Nos. 17823, 22661 and 22662 of 1994 in Writ Petition No. 11781 of 1994, dated 27 October 1994, holding that the quantum of last drawn wages shall be on the basis of the wages payable to the workman on the date of the award was also placed before me.
6. After hearing the arguments of both sides and going through the decisions and orders produced by them, I am inclined to hold that the expression "full wages last drawn" means the full wages which the workmen was entitled to draw pursuant to the award which had been stayed by the High Court. Bombay High Court in the decision cited supra has held. The Parliament had introduced S. 17-B of the Act with the object that the workman is not deprived of wages which he is entitled to drawn in case the award directing reinstatement is implemented. The workman is deprived of the wages payable in pursuant of the award only because of pendency of the proceedings. The award directing reinstatement and continuity of service makes it clear that the dismissal of the employee was illegal and in the eye of law the workman continued in service and consequently the workman was entitled also to payment of back wages. The determination of the back wages is only on the basis of what the workman would have drawn during the period commencing from the date of dismissal and till the date of reinstatement and the quantum of back wages includes all the permissible increases during that interregnums. The expression "full wages last drawn" in our judgment means the full wages which the workman was entitled to draw in pursuance of the award and the implementation of which is suspended during the pendency of the proceedings".
7. According to me, this appears to be the correct view. In fact, this decision has dealt with the decision of the Karnataka High Court. Before the Karnataka High Court, the main point was regarding reinstatement during the pendency of the writ petition before the High Court and also whether the provision of S. 17-B of the Act could be applied or not to the awards passed prior to the coming into force of the same which came into force on 21 August 1984. This is what the Bombay High Court has observed, in Para 5, at Page 449 of 1994 II CLR about the Karnataka High Court decision in 1993 II CLR 124.
"In the case before the Division Bench of Karnataka High Court, the award directing reinstatement of the workman was challenged before the learned single Judge and the operation of the award was stayed on condition that the workman is reinstated and paid current wages. In view of the limited suspension of the award, the question as to the applicability of S. 17-B of the Act did not arise for consideration. The Division Bench did make certain observations in Paras 12 and 13 of the judgment. The Division Bench observed in Para 12 that the contention, that the full wages last drawn should be interpreted so as to include not only the yearly increment, and the dearness allowance but also the revision of pay, if any, effected during the pendency of the proceeding before the Labour Court and the amount payable per month should be determined accordingly, cannot be accepted. The Division Bench subsequently held that the contents of the words 'full wages last drawn' would taken into their fold the wages drawn on the date of termination of the services plus the yearly increment and the dearness allowance to be worked out till the date of the award and that sum has to be paid to the workman during the pendency of the proceeding before the High Court. In our judgment, subsequent observations are accurate and the former are not so."
8. Section 17-B of the Act was introduced by Industrial Disputes (Amendment) Act, 1982, and the statement of objects for introduction of the section sets out that the need was felt to provide for payment of wages last drawn by the workman in view of the delay in implementation of the award caused due to award being challenged before the High Court or Supreme Court by the employer and which delay causes hardship to the workman.
9. In pursuance of the view expressed by me above, I pass the following order keeping in view the interests of both parties.
10. The interim stay is male absolute on condition that the writ petitioner deposits 75 per cent of the back wages to the credit of Industrial Dispute No. 511 of 1988 with the first respondent within eight weeks from this order. It is for the first respondent to verify the correctness of the back wages. On such deposit, the first respondent is directed to invest the same in a nationalised bank with a direction to pay the monthly interest to the second respondent herein. The remaining 25 per cent of back wages should be given to the second respondent by the petitioner within eight weeks from this order.
11. So far as the petition under S. 17-B of the Industrial Disputes Act is concerned, there will be a direction to the writ petitioner to pay the last drawn wages from the date of the writ petition, viz., 10 November 1994 till the disposal of the writ petition. The arrears of last drawn wages from 10 November 1994 till the end of January 1995 shall be paid on or before 31 March 1995. Thereafter, the last drawn wages shall be paid on or before the 10th of the succeeding month. All these are subject to the result of the writ petition. The quantum of last drawn wages shall be on the basis of the wages payable to the workman on the date of the award.
12. The writ miscellaneous petitions are ordered accordingly.
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