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  • S. 17B of the Industrial Disputes Act, 1947, that S. 17B
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  • S. 17B of the Industrial Disputes Act, 1947, that S. 17B
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This is an appeal against the Single Judge's order dated 1 February 1993 in Writ Petition No. 3486 of 1993 (L). The appellant challenged an award dated 17 August 1992 of the Presiding Officer, Labour Court, Mangalore, in Reference No. ID (LCM) 10 of 1988. The Labour Court had set aside the appellant's order dated 3 May 1985 terminating respondent 1's services and directed reinstatement of respondent 1 with all back-wages and consequential benefits and costs. The Single Judge's interim order (the order under appeal) stayed operation of that award on the condition that respondent 1 be reinstated and paid current wages.

Legal Issues Presented

  1. When an award directing reinstatement and full payment of back-wages is stayed, what wages should be ordered to be paid to the workman during the pendency of proceedings before the High Court or Supreme Court?
  2. What is the scope and effect of Section 17B of the Industrial Disputes Act, 1947 — in particular, does S.17B direct reinstatement or only payment of wages, and from what date should wages be paid under that provision?
  3. What is the meaning and content of the phrase "full wages last drawn" under S.17B — specifically, whether it includes yearly increments, dearness allowance, and/or revisions of pay effected during the pendency of proceedings?

Arguments of the Parties

Appellant's Arguments (Sri S.G. Sundaraswamy)

  • The appellant submitted that respondent 1 should not be ordered to be reinstated pending the final decision because respondent 1 had been absent for several days in each year from 1977 to 1985, and reinstatement pending appeal would be prejudicial to other workmen.
  • It was argued that when an award directing reinstatement is challenged, any interim order should be governed by Section 17B of the Industrial Disputes Act, 1947; that S.17B does not direct reinstatement but only directs payment of the full wages last drawn by the workman (inclusive of any maintenance allowance) where the workman had not been employed during the relevant period and had filed an affidavit to that effect.

Respondent 1's Arguments (Sri S. Krishnaiah)

  • Respondent's counsel relied on a Division Bench decision of the Delhi High Court (Fouress Engineering) for the proposition that "full wages" means full wages during the course of employment and not what was paid on termination, though that decision did not spell out the exact content of "full wages last drawn" to be paid from the date of award until disposal.
  • He contended that the Karnataka State Forest Industries Corporation decision (Writ Appeal No. 150 of 1993) governs the case and supports the Single Judge's order staying the award subject to reinstatement and payment of current wages.
  • He also argued that "full wages last drawn" should include yearly increment, dearness allowance and also revision of pay, if any, effected during the pendency of the proceedings before the Labour Court so that the monthly amount payable should reflect such revisions.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Bharat Singh v. New Delhi Tuberculosis Centre, New Delhi [1986 - II L.L.N 4] The Supreme Court observed that S.17B codifies the rights of workmen to receive wages delayed by long proceedings and gives Courts a mandate to award wages if conditions in the section are satisfied. The court relied on the objects and reasons considered in that decision to conclude that wages under S.17B should be payable "from the date of the award" until disposal of proceedings.
Fouress Engineering (I) (Pvt.) Ltd. v. Delhi Administration [1991 - II L.L.N 654] (Division Bench, Delhi High Court) Considered the meaning of "full wages" during pendency and stated that "full wages means full wages during the course of employment, and not what was paid upon termination of the employment." The court noted the decision but observed that it does not prescribe the specific content of "full wages last drawn" payable from award date till disposal; used it as part of the interpretive material but sought a fuller exposition given long pendency of Labour Court proceedings.
Karnataka State Forest Industries Corporation, Ltd. v. Labour Court [Writ Appeal No. 150 of 1993, decided 8 Feb 1993] Described an interlocutory order where a Single Judge stayed an award subject to reinstatement and payment of current wages; S.17B was not pressed or applied in that case. The court held that because S.17B was not invoked in that decision, it does not govern the specific S.17B issue in the present appeal and therefore cannot be treated as decisive for the question here.

Court's Reasoning and Analysis

Statutory text and legislative purpose

The court began by reproducing Section 17B and considered the objects and reasons for its insertion. Relying on the Supreme Court's treatment in Bharat Singh, the court accepted that S.17B is intended to compensate workmen for hardships caused by long delays in enforcing awards and to empower Courts to award wages where conditions are met. Although the exact phrase "from the date of the award" does not appear in the section, the court held that the objects and reasons justify treating the date of the award as the commencement date for the payment of full wages under S.17B until final disposal.

Meaning of "full wages last drawn"

The court examined competing authorities and practical realities. It observed that proceedings before Labour Courts can be prolonged, sometimes taking years or decades. Paying a workman during such prolonged pendency at the bare rate last drawn at the time of termination would produce injustice, given inflation and general wage escalation. Accordingly, the court interpreted "full wages last drawn" to incorporate:

  • the wages drawn on the date of termination/removal;
  • yearly increments accruing up to the date of the award; and
  • dearness allowance worked out and payable as permissible to the pay-scale attached to the post for the time being on the date of the award (in light of the definition of "wages" in S.2(rr)).

However, the court rejected the submission that "revision of pay" effected during the pendency of proceedings before the Labour Court should be included in "full wages last drawn." It reasoned that including revisions would effectively equate "full wages last drawn" with "current wages," which is a different concept; therefore revisions during pendency are excluded from the computation under S.17B for the interim period.

Application to the facts

Applying this interpretive framework to the present case, the court determined the payable monthly amount to respondent 1 as follows (as disclosed in the opinion):

  • Basic pay on 17 August 1992 (according to the old pay-scale, inclusive of increments admissible at time of removal): Rs. 686;
  • Dearness allowance worked out based on the pay-scale permissible for the time being as on the date of the award: Rs. 752.95;
  • Therefore, total monthly amount payable under the stay = Rs. 1,438.95 (Rs. 686 + Rs. 752.95).

Interplay with earlier decisions

The court explained why the Karnataka State Forest case did not control the present issue: in that earlier case S.17B was not relied upon, and the interim order had simply stayed the award subject to reinstatement and payment of current wages. Because the point under S.17B was not argued or decided there, it could not be treated as governing the S.17B question in this appeal.

Holding and Implications

Core Ruling: The appeal is allowed in part. The award dated 17 August 1992 is stayed subject to payment by the appellant of Rs. 1,438.95 per month to respondent 1 from the date of the award until final disposal of the writ petition.

Direct consequences and implementation directions contained in the order:

  • The stay of the award is conditional upon the appellant paying Rs. 1,438.95 per month to respondent 1 for the period from the date of the award until final disposal of the writ petition.
  • The amount fixed is operative only for the pendency period of the writ petition (i.e., from the date of the award till final disposal) and the ultimate wages payable will be determined afresh in the final order in the writ petition, in accordance with law and the observations made by the court.
  • The arrears of pay and dearness allowance from the date of the award till the end of March 1993 were ordered to be paid on or before 15 April 1993; thereafter, the monthly payments to be made as usual.
  • The court permitted Sri S.R. Nayak, learned Government Advocate, to file a memo of appearance for respondent 2 within six weeks.

Broader legal implications (as indicated in the opinion): the decision interprets S.17B to mean that when an award directing reinstatement is stayed, the employer may be required to pay the workman "full wages last drawn" calculated as wages on date of removal plus increments up to the date of award and dearness allowance permissible to the pay-scale as of the date of the award; however, pay revisions effected during pendency of proceedings before the higher court are not to be included in that interim computation.

    Visveswaraya Iron And Steel, Ltd. v. M. Chandrappa And Another

    Swami, A.C.J:— This appeal is preferred against the order, dated 1 February 1993, passed by the learned Single Judge in Writ Petition No. 3486 of 1993 (L). In the writ petition, the appellant has challenged the award, dated 17 August 1992, passed by the Presiding Officer, Labour Court, Mangalore, in Reference No. ID (LCM) 10 of 1988. The Labour Court has set aside the order, dated 3 May 1985, passed by the appellant terminating the services of respondent 1, and directed reinstatement of respondent 1 with all back-wages along with consequential benefits and the costs of the proceeding. By the order under appeal, the learned Single Judge has stayed the operation of the award subject to the condition that respondent 1 is reinstated and paid current wages.

    2. Sri S.G Sundaraswamy, the learned senior counsel appearing for the appellant, submits that this is not a case in which respondent 1 should be ordered to be reinstated pending decision as to the validity and correctness of the award, because of the fact that in the past he had remained absent for several days in each year starting from 1977 to 1985 and this will have a very deleterious effect on the other workmen if, pending the decision of this Court, the award is given effect to by reinstating respondent 1. It is also further submitted that whenever an award in which reinstatement has been ordered is challenged, the interim order, if any, has to be passed in terms of S. 17B of the Industrial Disputes Act, 1947, that S. 17B does not direct reinstatement and that it only directs payment of full wages last drawn by the workman inclusive of any maintenance allowance admissible to him.

    3. The question for consideration is, in the event the operation of the award, which directs reinstatement and full payment of back-wages is stayed, what are the wages that should be ordered to be paid to the workman during the pendency of the proceeding before this Court.

    4. Section 17B of the Act reads thus:

    ‘“17-B. Payment of full wages to workman pending proceedings in higher Courts.— Where in any case a Labour Court, Tribunal or National Tribunal by its 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 had 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.”

    5. The question as to whether this provision can be applied or not to the awards passed prior to the coming into force of the same (came into force on 21 August 1984), came up for consideration before the Supreme Court in Bharat Singh v. New Delhi Tuberculosis Centre, New Delhi [1986 - II L.L.N 4]. The Supreme Court, after referring to the objects and reasons for introducing such a provision, observed thus in Para. 10, at page 8:

    “….. This section has in effect only codified the rights of the workmen to get their wages which they could not get in time because of the long drawn out process caused by the methods employed by the management. This section, in other words, gives a mandate to the Courts to award wages if the conditions in the section are satisfied.”

    6. In the objects and reasons for introducing this provision, it was also specifically stated thus, in Para. 9 at page 7 and 8:

    “When Labour Courts pass awards of reinstatement, these are often constested by an employer in the Supeme Court and High Courts. It was felt that the delay in the implementation of the award causes hardship to the workman concerned. It was, therefore, proposed to provide the payment of wages last drawn by the workman concerned, under certain conditions,from the date of the award till the case is finally decided in the Supreme Court or High Courts.”

    (emphasis supplied)

    7. Though in S. 17B 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.

    8. The next questtion for consideration is, what is the meaning of the words “full wages last drawn” referred to in the section.

    9. Sri S. Krishnaiah, learned counsel appearing for respondent 1, has brought to our notice a Division Bench decision of the High Court of Delhi in Fouress Engineering (I) (Private,) Ltd. v. Delhi Administration [1991 - II L.L.N 654]. In that decision, the question regarding payment of full Wages during the pendency of the proceedings came up for consideration. It was observed: “full wages means full wages during the course of employment, and not what was paid upon termination of the employment.” The aforesaid decision also does not state what should be the content of “full wages last drawn” to be paid from the date of the award till the disposal of the proceedings.

    10. We are of the view that we have to take into consideration the pendency of the proceedings before the Labour Court which is usually long, in order to decide as to what should be the content of “full wages last drawn” by the workman to be ordered to be paid from the date of the award. It is possible and it is not uncommon that the proceedings before the Labour Court linger on for years. In some cases, it takes a decade. If after a decade the full wages last drawn are to be paid from the date of the award during the pendency of the proceedings before the Court at the same rate at which the wages were last drawn by the workman when he was removed, dismissed or terminated from the service, it would cause him great prejudice and injustice and will result in harassment of the workman. During the last period of 10 years there would be escalations in the cost of living and there would also be increase in the wages paid to the workmen doing the work of similar nature. It would be highly unjust even after the passing of the award, which directs reinstatement, to direct the management to pay only that much of the sum which was paid when the services of the workman were terminated about a decade ago. The object and reasons with which this provision is inserted, the words “full wages last drawn” used in the section, the time occupied for passing the award by the Labour Court or the Industrial Tribunal, as the case may be, the escalation in the cost of living during this period and the increase in the wages have to be taken into consideration in determining the content of “full wages last drawn” by the workman, because the object of the provision is to ensure that the workman gets the wages which he would have got had he been continued in service. If the management wants to have the pleasure of not reinstating the workman according to the award, it must be prepared to pay the full wages last drawn worked out till the date of the award with increments and dearness allowances as admissible to the workman, if the award has to be stayed during the pendency of the proceeding before this Court.

    11. Sri Krishnaiah, learned counsel appearing for the first respondent, strenuously contended that the decision in Karnataka State Forest Industries Coporation, Ltd. v. Labour Court [Writ Appeal No. 150 of 1993, decided on 8 February 1993], governs the case; therefore, there is no question of interfering with the interim order passed by the learned Single Judge staying the award subject to the reinstatement on payment of current wages. In that decision, all that has been stated is that:

    “2. The learned Single Judge pending disposal of the writ petition has stayed the operation of the said order subject to reinstatment of respondent 3 and paying current wages. However, learned counsel tried to argue on the merits of the case. It is not possible to appreciate those contentions in the appeal preferred against the interlocutory order. Therefore, we do not propose to deal with any one of such contentions as the interim order only directs reinsatement of the third respondent and payment of current wages. Subject to this, the award has been stayed. As a result thereof, the appellant is not bound to pay the back-wages up to the date of reinstatement, which will be decided in the writ petition. Hence, we do not see any grounds to interfere. The appeal is rejected. All the contentions having a bearing on the merits of the case are left open.”

    12. Therefore, it is clear from the aforesaid decision that S. 17B of the Act was not pressed into service and it was not at all contended that in terms of S. 17B of the Act, if an award is stayed, the Court has to adhere to the provisions contained therein and to order only full wages last drawn. That was a case in which the learned Single Judge stayed the operation of the award subject to reinstatement on paying current wages. It was not contended in that case that in terms of S. 17B, the order should have been passed. Therefore, we are of the view that that decision cannot be held to govern the issue raised in this appeal.

    13. It is also contended by Sri Krishnaiah that the words, “full wages last drawn” should be interpreted so as to include not only to 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. We are of the view that this contention cannot be accepted because if the revision of pay has to be taken into consideration, then meaning that should be given to the words “full wages last drawn” would become different and it would become current wages which is quite different and cannot be equated with that of the “full wages last drawn.” Hence, we are of the view that the content of the words “full wages last drawn” would take 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 this Court. We would like to make it clear that the wages that would be worked out up to the date of the award shall have to be paid during the pendency of the proceedings before this Court in the event the award is stayed, without reference to the revision of wages, if any, during the pendency of proceedings before this Court.

    14. Lastly, it is urged that even if it is held that the “full wages last drawn” would mean the wages last drawn on the date of removal of the workman increment and dearness allowance, but the dearness allowance will have to be paid as defined in S. 2(rr) of the Act; that the dearness allowance will have to be paid at the rate as the workman is for the time being entitled to. It is also further submitted that dearness allowance is connected with the cost of living; therefore, it cannot be held to be static, as such, the dearness allowance as permissible to the pay-scale of the post for the time being shall have to be taken into consideration and not on the basis of the old pay-scale. We are of the view that in the light of the definition of the word “wages” as contained in S. 2(rr) of the Act, the dearness allowance which the workman is entitled to for the time being will have to be ordered to be paid. Thus, if the management wants to have the award, which directs reinstatement stayed during the pendency of the proceeding before this Court, it is liable 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, with the increments up to the date of award, and the dearness allowance as permissible to the pay-scale attached to the post for the time being on the date of the award. It is not in dispute that the basic pay of the first respondent as on 17 August 1992, according to the old pay-scale would be Rs. 686 which is inclusive of the increments admissible to the pay-scale attached to the post at the time of removal of the first respondent from service. The dearness allowance worked out on the basis of the dearness allowance payable for the time being to the workman in question would be Rs. 752.95 because the pay-scale that has been revised to the post in question as on the date of the award is Rs. 1,380-23-1541-27-1730 and the basic pay would come to Rs. 1,595 as on the date of the award. The dearness allowance permissible for the time being would be Rs. 752.95 Therefore, the total amount payable to the first respondent would be Rs. 1,438.95 (Rs. 686 + dearness allowance 752-95) as on the date of the arward.

    15. For the resasons stated above, the appeal is allowed in part. The order passed by the learned Single Judge is modified in the following terms. The award, dated 17 August 1992, passed by the Presiding Officer, Labour Court, Mangalore, in Reference No. ID (LCM) 10 of 1988, is stayed subject to the condition that the appellant pays Rs. 1,438.95 per month to the first respondent from the date of the award till the date of final disposal of the writ petition. It is also made clear that the amount fixed by us is intended to be operative during the pendency of the writ petition, as such, this order only governs the period from the date of the award till the date of final disposal of the writ petition. The wages payable to the respondent shall have to be determined afresh in accordance with law and in the light of observations made in the final order that may be passed in the writ petition. The arrears of pay and dearness allowance payable to the first respondent from the date of the award till the end of March 1993, shall be paid on or before 15 April 1993, and thereafter, it shall be paid every month as usual.

    16. Sri S.R Nayak, learned Government Advocate, is permitted to file his memo of appearance for respondent 2 in six weeks.

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    Visveswaraya Iron And Steel, Ltd. v. M. Chandrappa And Another
    (Mar 16, 1993)