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Re: Samir Kumar Chatterjee And Others v. State Of West Bengal And Others
Factual and Procedural Background
The petitioners are employees of the Calcutta State Transport Corporation (CSTC) working at its City Office, Central Workshop, and various depots. The Government of West Bengal established a Pay Review Committee which recommended new pay scales for government employees, including those of CSTC. The Government notified these recommendations effective from April 1, 1970. Subsequently, respondent No. 3 fixed the new pay scales for CSTC employees by an order dated November 29, 1972. This order directed that arrear payments for the period April 1, 1970 to March 31, 1972, except for Provident Fund elements, should not be paid in cash but credited to a Retirement Benefit Fund. As a result, the petitioners did not receive their arrear salaries at the enhanced rates for that period. The petitioners challenged the withholding of these arrears and sought a writ of mandamus to quash the impugned directions and compel payment of the withheld arrears.
Legal Issues Presented
- Whether the directions to withhold arrear payments and credit them to a Retirement Benefit Fund, rather than paying them in cash, violate Section 7 of the Payment of Wages Act.
- Whether the State Government or the Calcutta State Transport Corporation had the authority under the Road Transport Corporation Act, 1950, or any other law, to make such deductions from employees' wages.
- Whether the impugned order directing the creation of the Retirement Benefit Fund and withholding of arrears is legally valid and authorized.
Arguments of the Parties
Petitioners' Arguments
- The directions to withhold arrear salaries from April 1, 1970 to March 31, 1972 are contrary to law, particularly Section 7 of the Payment of Wages Act, which prohibits unauthorized deductions from wages.
- Section 7 mandates payment of wages without deductions except those authorized by or under the Act, and no dispute exists that this section applies to the petitioners.
- Therefore, the withholding of arrears should be struck down and the withheld amounts paid to them.
Respondents' Arguments
- Section 7(2)(h) of the Payment of Wages Act authorizes deductions required by order of a competent authority, which includes the State Government.
- The Government of West Bengal, as a competent authority, issued orders for withholding arrears and crediting them to a Retirement Benefit Fund bearing interest, payable upon retirement or termination.
- The Road Transport Corporation Act, 1950 empowers the Government and Corporation to regulate conditions of service and pay scales, relying on Sections 14(3), 29, and 34 of the Act.
- These provisions authorize the Government to issue general instructions and direct reserve and other funds, thus justifying the impugned orders.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court analyzed the applicability of Section 7 of the Payment of Wages Act and the provisions of the Road Transport Corporation Act, 1950. It acknowledged that Section 7 prohibits unauthorized deductions from wages but permits deductions authorized by law, including those ordered by a competent authority under clause (h) of sub-section (2).
However, the court found that the State Government's order to withhold arrears and credit them to a Retirement Benefit Fund was not supported by any express provision of the Road Transport Corporation Act. Specifically, Section 14(3) allows pay scales and service conditions to be prescribed or regulated by regulations, but no such regulation authorized the deductions.
Section 29 authorizes the Corporation to maintain reserve and other funds as directed by the State Government, but the management and sums credited to such funds must be determined by the Corporation, not unilaterally by the Government. Here, the Government alone directed the deductions without Corporation's determination.
Section 34 empowers the State Government to issue general instructions to the Corporation regarding recruitment, service conditions, wages, reserves, and profits. However, this residuary power does not expressly authorize the Government to deduct wages lawfully payable to employees.
The court emphasized that depriving employees of earned wages involves a vested right and requires clear and express statutory authority. Mere implications from various provisions do not suffice.
Consequently, the court concluded that the deductions and withholding of arrear salaries were unauthorized and illegal.
Holding and Implications
The court made absolute the Rule Nisi and allowed the petitioners' application, quashing the impugned directions withholding the arrear payments. However, the operation of this order was stayed until January 3, 1974. Each party was directed to bear its own costs.
The decision directly affects the parties by mandating payment of the withheld arrears to the petitioners. The opinion does not establish any new precedent beyond this case.
Ghose, J.:— Petitioners are the employees under the respondent, the Calcutta State Transport Corporation working at its City Office, Central Workshop as well as various depots. The Pay Review Committee established by the Government of West Bengal made recommendations for fixing of new scales of pay of the employees of the Government of West Bengal. The Government of West Bengal in its turn by a notification made the said recommendations of the said Pay Review Committee applicable to the employees of the Calcutta State Transport Corporation with effect from April 1, 1970. The respondent No. 3 thereafter fixed such pay scale for its employees which include the petitioners with effect from April 1, 1970. The order fixing such scale of pay was made on November 29, 1972. A copy of the said order has been set out in Annexure A to the petition. The said order, inter alia, provides as follows:—
“As per G.O 10565 W.T dated September 30, 1972, the arrear payments (except P.F elements) for the period from April 1, 1970 to March 31, 1972, should not be paid in cash but be credited to a special fund to be named as Retirement Benefit Fund, subject to the terms and conditions laid down therein.”
2. Because of the aforesaid directions contained in the said order, the petitioners have not been paid their arrear of salaries payable to them at the enhanced rate as mentioned hereinabove for the period from April 1, 1970 to March 31, 1972.
3. The petitioners in the instant application impugned the said directions contained in the said order for withholding their salary at the enhanced rate from April 1, 1970 to March 31, 1972 and pray for the issue of a Writ in the nature of Mandamus for having the said directions quashed.
4. The contention of Mr. Sadhan Gupta appearing on behalf of the petitioners is that the said directions for withholding of the said pay for the said period was and is contrary to the provisions of law and in particular Section 7 of the Payment of Wages Act and therefore should be struck down. The petitioners also in the instant proceeding pray for a Writ in the nature of Mandamus directing the respondent Nos. 2 to 5 to pay all arrears of salaries withheld from the petitioners for the said period between April 1, 1970 to March 31, 1972. Section 7 of the Payment of Wages Act provides for the payment of the Wages of an employed person to him without the deduction of any kind except those authorised by or under this Act. It has not been disputed by or on behalf of any of the Respondents that Section 7 is applicable to the instant case.
5. Mr. Somen Bose appearing on behalf of the respondents contended that Section 7 provides for deductions to be made in terms of different clauses under sub-section (2) of the said section. The present deductions have been authorised by the Government of West Bengal in terms of clause (h) to sub-section (2) of the said section of the Act. Sub-section (2) authorises deductions from the wages of an employee in accordance with the provisions of the said Act only and enumerates the kinds of deductions that can be made under the provisions of the said Act. Clause (h) to the said sub-section reads as follows:—
“(h) deductions required to be made by order of a court or other authority competent to make such order;”
6. Mr. Bose submitted that the State Government is an authority within the contemplation of the said clause (h) which was competent to pass the said order of deductions from the said salary in order to keep the same in a reserve fund as and by way of retiring benefit to be paid to the petitioners. Mr. Bose filed two orders, one dated July 22, 1972 and the other dated September 30, 1972 made by the Government of West Bengal. The order dated September 30, 1972 directs the deduction of the said salary for the said period for the purpose of crediting the same to a special fund to be named as Retirement Benefit Fund bearing interest at 5 per cent per annum payable at the time of retirement or termination of service of an employee including the petitioners along with Provident Fund payable to them. Mr. Bose contended that the Road Transport Corporation Act, 1950 under the provisions whereof the Calcutta State Transport Corporation was formed authorised the State Government to pass the impugned orders and Mr. Bose relied on sub-section (3) to Section 14, Section 29 and Section 34 of the said Act as authorising the Government to pass the impugned orders. Section 14 of the said Act reads as follows:—
“14. (1) Every Corporation shall have a Chief Executive Officer or General Manager and a Chief Accounts Officer appointed by the State Government.
(2) A Corporation may appoint such other officers and servants as it considers necessary for the efficient performance of its functions.
(3) The conditions of appointment and service and the scales of pay of the officers and servants of a Corporation shall—
(a) as respects the Chief Executive Officer or General Manager and the Chief Accounts Officer be such as may be prescribed, and
(b) as respects the other officers and servants be such as may, subject to the provisions of Section 34, be determined by regulations made under this Act.”
7. Sub-section (3) quoted above authorises prescribing the conditions of appointment and service and the scales of pay of the officers and servants of a Corporation in the manner as stated in clauses (a) and (b) of the said sub-section. None of the petitioners is either the Chief Executive Officer or General Manager or Chief Accounts Officer of the Corporation. They, therefore, formed a part of the servants of the Corporation as mentioned in clause (b) to the said Section 14 of the Act. No regulation has been framed under the provisions of the said Act authorising the deduction of the said salary and such deduction of salary under the impugned order as mentioned above cannot be supported by Section 14 of sub-section (3) thereto of the said Act. Section 29 of the Act reads as follows;
“29. (1) A Corporation shall make such provisions for depreciation and for reserve and other funds, as the State Government may from time to time, direct.
(2) The management of the said funds, the sums to be carried from time to time to the credit thereof and the application of the moneys comprised therein shall be determined by Corporation:
Provided that no fund shall be utilised for any purpose other than that for which it was created without the previous approval of the State Government.”
8. Sub-section (1) to Section 29 of the Act authorises the Corporation at the direction of the State Government to make provision for depreciation and for reserve and other funds. The management of the said funds, the sums to be carried to the credit thereof and the application of the moneys comprised therein shall be determined by the Corporation. In the instant case it is evident that the Corporation has not decided or determined the sums to be carried to any fund to be constituted as Retiring Benefit Fund nor has the Corporation decided as to the application of the moneys to be comprised in such fund in accordance with sub-section (2) to Section 29. As a matter of fact the impugned direction is not the direction of the Corporation but of the Government. Section 29, in my opinion, does not authorise the Government to determine or decide as to what sums should be carried from time to time to any reserve or other funds as may be formed or constituted under Section 29(1) of the said Act. The only other section that remains to be considered by me in the instant application is Section 34 of the said Act. Section 34 of the said Act reads as follows:—
“34. (1) The State Government may, after consultation with a Corporation established by such Government, give to the Corporation general instructions to be followed by the Corporation, and such instructions may include directions relating to the recruitment, conditions of service and training of its employees, wages to be paid to the employees, reserves to be maintained by it and disposal of its profits or stocks.
(2) In the exercise of its powers and performance of its duties under this Act, the Corporation shall not depart from any general instructions issued under sub-section (1) except with the previous permission of the State Government.”
9. Section 34 is really by way of residuary provision or power conferred upon the State Government by the Act. The Government may under the said section give any direction or instruction to the Corporation in regard to the recruitment, conditions of service or training of the employees or wages to be paid to the employees, reserves to be maintained by the Corporation and disposal of its profits or stocks. The said section also does not, in my opinion, confer any right upon the Government to direct deduction from any wages lawfully payable to any of the employees of the Corporation including the petitioners. It must be noted that in depriving the petitioners or any of the employees of the wages earned by them, a vested right of such employees or petitioners are taken away. Plain and express terms must, therefore, have to be shown in any statute authorising such deprivation or deduction of wages of employees. Such deduction or deprivation cannot be supported by mere implications from different provisions in Act. In my opinion, there is no such express provision in the Act authorising either the Corporation or the State Government to pass impugned direction or act in the manner as it has been doing in deducting the salary of its employees including the petitioners for the period mentioned hereinabove. The said directions and acts are unauthorised.
10. For the reasons mentioned above, this application must succeed. Rule Nisi is made absolute. Each party shall, however, pay and bear his or its own costs of and incidental to this application. The operation of this order shall however remain stayed until January 3, 1974.
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