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Imperial Tobacco Co.... v. The Authority Appoin...
Structured Summary of the Opinion — Imperial Tobacco Company of India, Ltd. (Article 227)
Factual and Procedural Background
The petitioner is the Imperial Tobacco Company of India, Ltd. The petition challenges an order dated 25 February 1967 of the Payment of Wages Authority in P.W.A. Cases Nos. 73 and 75 of 1965. The underlying proceedings before the Authority were applications made by two employees (opposite parties Nos. 2 and 3) under Section 15 of the Payment of Wages Act, 1936, claiming unpaid overtime wages for the period 1 January 1965 to 15 March 1965 — specifically six hours of overtime per week (their rate of wages being Rs. 250/- per month).
The Authority allowed the application in favour of the employees in part. The Authority applied statutory provisions of the Factories Act, 1948 (notably Sections 51 and 59) and concluded in one part that the statutory overtime provision (Section 59(1)) did not apply because the applicants did not allege working over 48 hours per week; in another part the Authority found that because the employees had previously worked 42 hours per week and after being transferred to another section were required to work 48 hours per week, they were entitled to extra remuneration corresponding to the increased hours. The company challenged that part of the order as being without jurisdiction under Section 15 of the Payment of Wages Act and approached the High Court under Article 227 of the Constitution of India.
Legal Issues Presented
- Whether the Payment of Wages Authority had jurisdiction under Section 15 of the Payment of Wages Act, 1936 to award overtime or extra remuneration on the basis that employees' working hours were increased following a transfer (i.e., whether such a claim fell within "deductions from wages" or "wages" as contemplated by Section 15).
- Whether Section 59(1) of the Factories Act, 1948 applied to entitle the employees to overtime wages (i.e., whether they had worked more than nine hours a day or more than forty-eight hours in a week).
- Whether the employees had established a contractual entitlement to overtime wages (i.e., whether prior usage of forty-two hours constituted a contractual term entitling extra wages when hours increased to forty-eight).
- Procedural/curial issue: whether the petitioner's failure to raise an objection to the Authority’s jurisdiction before the Authority precluded raising it before the High Court under Article 227.
Arguments of the Parties
Petitioner (Imperial Tobacco Company of India, Ltd.)
- Contended that the Payment of Wages Authority's conclusion (that employees were entitled to extra remuneration because their working hours rose from 42 to 48 per week) was without jurisdiction and outside the purview of Section 15 of the Payment of Wages Act.
- Argued implicitly that the statutory requirements of Section 59(1) of the Factories Act were not satisfied and that no contractual right to overtime had been proved by the employees.
Opposite Parties (Employees) / Authority's Position before the Authority
- Employees applied under Section 15 for overtime wages for six hours per week for a specified period; their application asserted unpaid overtime wages.
- Before the Authority, employees relied on the absence of the company's attendance register to contend that their claims should be presumed established (attendance register was not produced by the company).
- The Authority concluded in part that, although Section 59(1) did not apply (no allegation of work beyond 48 hours/week), prior usage of 42 hours per week for those employees constituted their normal working hours; therefore, an increase to 48 hours after transfer entitled them to "extra remuneration" proportionately.
If any party's specific oral submissions or additional written arguments were presented to the court in the original record beyond what is summarized here, those details were not set out in the provided opinion excerpt.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| A.V. D'Costa v. B.C. Patel, AIR 1955 SC 412 | Establishes that the jurisdiction of the Payment of Wages Authority is limited by the terms of Section 15 and that the Authority has no power to determine matters beyond that jurisdiction (e.g., to fix wages). | The court relied on this authority to support the proposition that the Payment of Wages Authority could not itself decide what wages should be or effectively make a contract between the parties; the Authority's extra-Statutory finding was therefore beyond jurisdiction. |
| Shri Ambika Mills Co., Ltd. v. S.B. Bhatt, AIR 1961 SC 970 | Supports the principle that the Authority's jurisdiction under the Payment of Wages Act is limited to matters within Section 15 and incidental matters only. | The court cited this decision as part of a line of authorities demonstrating the limited statutory jurisdiction of the Payment of Wages Authority. |
| Payment of Wages Inspector v. B.E.S. & I. Co. Ltd., AIR 1969 SC 590 | Affirms that the Payment of Wages Authority's jurisdiction is confined to what Section 15 provides and it cannot exercise powers outside that remit. | The court used this precedent to reinforce that the Authority exceeded its permissible functions by awarding extra remuneration on the facts found, rather than determining a statutory or contractual right to overtime wages. |
| (Reference within text) D'Costa's case, AIR 1955 SC 412 (referred to again) | Reiterated the limitation on the Authority's power to fix wages or create contractual rights. | The court reiterated that the Authority had no authority to state what wages should be and that doing so went beyond Section 15 jurisdiction; it cited D'Costa to invalidate the Authority's extra-Statutory conclusion. |
Court's Reasoning and Analysis
The court proceeded by examining the statutory confines of the Payment of Wages Authority's jurisdiction and the substantive elements of the employees' claim. The reasoning followed these steps as stated in the opinion:
- Jurisdictional foundation: The court recognized that the Authority's jurisdiction under the Payment of Wages Act is founded on Section 15, which empowers the Authority "to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of the wages, of persons employed or paid in that area." The court noted established Supreme Court decisions holding that the Authority's jurisdiction is limited by Section 15.
- Identify statutory concepts: The court observed that, to determine jurisdiction in the present case, it was necessary to consider whether the claim involved a "deduction" from "wages" as defined under the Act. "Wages" is a defined term (Section 2(vi)) and the claim here was specifically for "overtime wages."
- Application of the Factories Act: The court noted that statutory provision for overtime is contained in Section 59(1) of the Factories Act (overtime is payable at twice ordinary rate where a worker works more than nine hours a day or more than 48 hours a week). The Authority correctly observed that Section 59(1) conditions were not satisfied because the employees did not allege work beyond 48 hours per week.
- Contractual entitlement analysis: The court considered whether the employees could found a claim on contractual terms. It found that to succeed on a contractual basis the employees would have needed to establish the terms of their contract (or statutory supplementation thereof). The court recorded that no formal contract had been produced or pleaded to the Authority and that the attendance register (which would only show attendance) could not prove a contractual term promising overtime pay upon exceeding a particular number of hours.
- Evaluation of the Authority's reasoning: The court analyzed the Authority's conclusion that prior usage (working 42 hours) constituted the "normal working hours" for those employees and that an increase to 48 hours therefore entitled them to extra remuneration. The court held that this reasoning had no legal justification: adopting prior usage as a contractual or statutory entitlement without proof was impermissible. The Authority had effectively created a contractual entitlement or changed the terms of employment to the employees' advantage — a power the Authority did not possess under Section 15.
- Doctrine of factum valet rejected as proof of contract: The court rejected the Authority's reliance on "factum valet" (i.e., that practical working practice sufficed to establish a contractual term) in the industrial/employment context where employment conditions are contractual or statutory and must be adequately proved.
- Jurisdictional conclusion and supervisory remedy: The court reviewed a procedural objection raised by the respondents that the petitioner had not challenged the Authority's jurisdiction before the Authority. The court explained that while factual jurisdictional objections are ordinarily for the statutory tribunal, questions that go to the root of a tribunal's statutory jurisdiction cannot be waived and may be entertained by a supervisory court under Article 227. Having examined the matter, the court found that the Authority had exceeded its jurisdiction insofar as it purported to grant an entitlement to overtime wages on the basis of prior usage without contractual or statutory foundation.
- Result of analysis: The court concluded that the part of the Authority's order which went beyond finding no statutory right under Section 59(1) — i.e., the part that awarded extra remuneration on the basis of increased hours relative to prior usage — was patently without jurisdiction and vitiated by an error apparent on the face of the record.
Holding and Implications
Holding: The petition is allowed; the impugned order dated 25th February 1967 in P.W.A. Cases Nos. 73 and 75 of 1965 is set aside. The Rule is made absolute.
Implications and Direct Effects
- The portion of the Authority's order that awarded "extra remuneration" on the basis that the employees' working hours had increased from 42 to 48 per week (and thereby created an entitlement to overtime) was held to be without jurisdiction and has been set aside.
- The petitioner company is entitled to withdraw any amount that might have been deposited pursuant to the Authority's award.
- No order as to costs was made by the court (expressly stated: "I make no order as to costs").
- The opinion does not discuss any broader legal principle being established as a novel precedent beyond applying existing authorities on the limits of the Payment of Wages Authority's jurisdiction; the decision's immediate effect is the vindication of the petitioner's challenge and the setting aside of the Authority's impugned findings.
This summary is drawn exclusively from the provided opinion text. No facts, arguments or legal propositions have been added beyond what the opinion itself contains.
1. This is an application Under Article 227 of the Constitution of India, the applicant being the Imperial Tobacco Company of India, Ltd., and it concerns an application made under Section 15 of the Payment of Wages Act, 1936, by two of their employees, the opposite parties Nos. 2 and 3, before, the Authority appointed under that Act, who is the opposite party No. 1. The application was disposed of by the impugned order of the Authority dated 25-2-67, in P.W.A Cases Nos. 73 and 75 of 1965. The application under Section 15 of the said Act is reproduced at annexure ‘A’ to the present petition. It was a simple case of alleged deduction from wages and the material averment is as follows:
“The applicant's wages have not been paid for the following wages period (s)…… (give dates)……. 6 hrs overtime wages from per week 1st January 65 to 15th March 65 (rate of wages Rs. 250/- per month).” The Payment of Wages Authority allowed this application in favour of the employees. His findings may be divided into two parts, half of which, however, was in favour of the employer. He rightly directed himself to the Statutory Rules to ‘overtime wages’ as contained in Section 59 of the Factories Act inasmuch as admittedly the workmen concerned were workmen governed by the Factories Act, 1948, Chapter VI of which contains certain Statutory provisions relating to the working hours of adult workmen governed by the Factories Act. The first relevant Section is Section 51 which fixes the maximum weekly hours for every adult worker at fortyeight hours per week. The question of overtime or extra wages for working beyond fortyeight hours dealt with in Section 59(1) thereof is relevant:
“Where a worker works in a factory for more than nine hours in any day or for more than fortyeight hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.”
2. Now, in the first part of his order the Authority held that Section 59 of the Act did not entitle these employees to any overtime wages inasmuch as they did not, in the instant case, allege that they had been asked to work for more than fortyeight hours in a week. Had he stopped here the order of the Authority would have been entirely in favour of the employers and against the applicants before him, but in the second part of his order the authority stated that it had been established before him that prior to the transfer of these employees from the General Section to Accounts Section of the Factory, these employees had actually been working not more than forty two hours and because in the Accounts Section working hours were at the rate of fortyeight hours per week they had actually rendered six hours extra per week of work as compared with the number of working hours they used to render prior to their transfer in the Accounts Section He, therefore, concluded that the usage prior to the transfer to the Accounts Section would constitute the normal working hours of these employees and that since they had rendered more than that after their transfer to the Accounts Section they should get “extra remuneration if the working hour is increased.” Two of his observations must be noted: Firstly, he says, “Section 51 of the Factories Act authorises an employer to fix the working hours at 48 hours per week, but that does not give the employer a right to alter the service condition of the employee to the latter's disadvantage.” The second one is, “in this case the applicants were employed for doing 42 hours work in a week and accordingly their wages were fixed up. Now if the company decides to get 48 hours work from them their remuneration must increase proportionately.” On behalf of the management it is urged that the conclusion of the Authority upon which the impugned order is based is without jurisdiction, being outside the purview of Section 15 of the Payment of Wages Act, 1936, upon which the jurisdiction of the Statutory Authority is founded.
3. Mr. Das Gupta, appearing on behalf of the opposite party, raised a preliminary objection, namely, that since the petitioner before this Court did not raise any objection to the jurisdiction of the Authority before the Authority himself that objection should not be entertained in this Court under Article 227 There have been, of course, decisions under Article 226 on this point which may be taken to be applicable to the jurisdiction under Article 227 as well but those decisions proceed on the basis that the objection as to jurisdiction involves questions of fact which only the Statutory Authority has the jurisdiction to determine and in such cases the High Court, sitting in supervisory jurisdiction, should not entertain the objection involving questions of fact, in whole or in part, for the first time, but at the same time. it has been laid down in a number of cases where the question of jurisdiction goes to the root of the limited jurisdiction of a Tribunal as given by a statute the absence of jurisdiction cannot be waived by any amount of consent of tire litigant and, therefore, the business of supervisory court, whether under Article 226 or under 227, being to keep the Statutory Authority within the bounds of his limited authority the supervisory court should not throw out a petition either under Article 226 or 227 on the ground that such objection was not taken before the Statutory Tribunal. Let us, therefore, examine whether there is in the instant case any such question of jurisdiction going to the root of the Authority. There is little doubt that the jurisdiction of the Authority under the Payment of Wages Act is founded on Section 15 of that Act and it has been held in various cases of the Supreme Court, for instance, A.V D'Costa v. B.C Patel, AIR 1955 SC 412; Shri Ambika Mills Co., Ltd. v. S.B Bhatt, AIR 1961 SC 970; Payment of Wages Inspector v. B.E.S & I. Co., Ltd., AIR 1969 SC 590; that the jurisdiction of the Authority under the Act is limited by the terms of Section 15 of the Act and that he has no jurisdiction to go into other questions or to exercise any other power besides what is conferred by Section 15 and matters which are incidental thereto.
4. Now, the jurisdiction under Section 15(1) is “to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of the wages, of persons employed or paid in that area.” In the instant case there is no question that the applicants before the Authority were persons employed within the specified area and this is also not a ease where delay in payment is alleged, We are, therefore, left to the determination of two concepts, namely, “Deductions” and “Wages” and if it is found that in the facts of the instant case neither of these two concepts are satisfied it must at once be held that the payment of wages Authority had no jurisdiction to entertain the application in question. As to what is ‘deduction’ is not directly defined in a few words but it has been explained in a number of provisions to imply that any sort of loss of wages will come within the concept of deduction unless that is excepted under any of the exceptions contained in the relevant sections, for instance, Section 7(2). The first thing, therefore, to determine is whether there was any fixed wages from which any loss or deduction has been incurred by the employee. Wages is defined in Section 2(vi) of the Act as meaning, “wages means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment, and includes ….” It must not be forgotten that the claim in the present case does not relate to ordinary wages of the employee but for ‘overtime wages' as it is explicitly mentioned in the application under Section 15 and that claim is made on the basis that the employees were asked to work for six hours, more than what they were liable to work in their employment. As I have said at the very beginning, the Factories Act statutorily deals with a claim for ‘overtime wages’ and the conditions of that statutory provision under Section 59(1) are not satisfied in this case.
5. The only other way in which the employees concerned could claim overtime wages was by establishing it under the terms of contract of employment. They were entitled to get overtime wages if they had to work in excess of fortytwo hours per week as they had been used to render previous to their transfer in the Accounts Section. Before the Authority, however, it does not appear that the petitioners made the allegation that there was any formal contract of employment between them and the company. They neither produced any copy of such contract nor did they call for any such contract from the company. The only argument which was adduced before the Authority was that the opposite party, namely, the company, had failed to produce the attendance register and therefore the cases of the applicants must be presumed to have been established but the attendance register could only testify as to what was the volume of attendance of the employees at the different periods. It could not possibly prove that there was a contract between the parties that if they rendered work in excess of a particular quantum of working hours they would be entitled to claim ‘overtime wages’.
6. The sole basis upon which the Authority bases his conclusion is that because the employees had worked for six hours more than what they used to render prior to their transfer from another section of the same company they must, without more, have a legal right to claim overtime wages. As a proposition of law this has no justification nor could Mr. Das Gupta adduce any legal support for the proposition advanced by the Authority that Section 51 of the Factories Act “does not give the employer a right to alter the service conditions of the employee to the latter's disadvantage.”
7. The real trouble is that what was the service condition of these employees has not been proved in this case. The Authority thought that factum valet was enough proof. That doctrine, however cannot be applied in the sphere of industrial establishment where the conditions of employment are either contractual or statutory in so far as a contract has been supplemented by legislation by the Welfare State.
8. Mr. Chakrabarty, on behalf of the petitioner company, is also justified in saying that what the Authority has done is not to say that the petitioners have a legal right to overtime wages under their contract of employment or under the Statute but that because they used to work previously at the rate of fortytwo hours per week and because they have since the transfer been working at the rate of fortyeight hours per week “their remuneration must increase proportionately.” This finding, in fact, is nothing but to make a contract between the parties by the Statutory Authority, which jurisdiction he could not claim under the Statute. He has no authority to say what the wages should be, as observed in D'Costa's case, AIR 1955 SC 412. He has the jurisdiction to determine what the Rules were and in this case the Payment of Wages Authority could not say that the applicants before him had a legal right to claim overtime wages under the Rules and anything which he has said beyond the first half of his order is patently without jurisdiction and vitiated by error apparent on the face of the record and, in this view, the application under Article 227 of the Constitution must succeed.
9. The Rule is, therefore, made absolute but I make no order as to costs. The impugned order in P.W.A Cases Nos. 73 and 75 of 1965 dated 25th February, 1967, is, accordingly, set aside.
10. The petitioner company will be entitled to withdraw any amount which might have been deposited in terms of the award.
11. Petition allowed.
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