Purshottam H. Judye ... v. V.B Potdar The Autho...

Gajendragadkar, C.J— The short question of law which arises in this appeal is whether workmen are entitled to apply to the Authority appointed under the Payment of Wages Act, 1936 (4 of 1936) (hereinafter called “the Act”) for the recovery of the amount of gratuity due to them under an award passed between them and their employer. This question has been answered by the Bombay High Court in the negative and the appellants, Purshotam H. Jadye and 34 others, who have come to this Court with a certificate granted by the said High Court, contend that the view taken by the High Court is not justified on a fair and reasonable construction of Section 2(vi)(d) of the Act. Respondent 1 is Mr V.B Potdar, the Authority appointed under the Act, whereas Respondent 2 the Bombay Chronicle Co. Private Ltd., is the employer of the appellants.

2. Respondent 2, a company having its registered office at Red House, Horniman Circle, Fort, Bombay, were the printers and publishers of the “Bombay Chronicle”, an English Daily, which used to be published in Bombay until the 5th April, 1959. On that day, the paper discontinued its publication. The appellants are the former employees of Respondent 2. In a reference made to the Industrial Tribunal, Bombay under the Industrial Disputes Act, an award was pronounced by the Said Tribunal on 28th September, 1949, framing a scheme of gratuity payable to the appellants. This award directed Respondent 2 to pay gratuity to the appellants on terms and conditions prescribed by it. It appears that Respondent 2 terminated this award on 29th February, 1952. After the Bombay Chronicle ceased publication, the appellants moved Respondent 1 under the Act by several applications for payment of the gratuity due to them. These applications were made in July and August, 1959.

3. Respondent 2 raised a preliminary objection against the competence of the appellants' applications. It was urged on its behalf that the amounts claimed by the appellants were not wages within the meaning of Section 2(vi)(d) of the Act and as such the applications were incompetent. Respondent 1 has rejected the contention raised by Respondent 2, and has held that the applications made by the appellants were competent and he had jurisdiction to deal with them on the merits.

4. Respondent 2 then moved the Bombay High Court by a special civil application No. 1285/1960 under Articles 226 and 227 of the Constitution. It was urged before the High Court by Respondent 2 that the view taken by Respondent 1 about the competence of the applications made by the appellants before him was contrary to law. This plea has been upheld by the High Court with the result that the finding recorded by Respondent 1 on the question about the competence of the applications made by the appellants has been reversed and the applications themselves have been ordered to be dismissed. It is this finding which is challenged before us by Mr Naik on behalf of the appellants. The question thus raised for our decision lies within a very narrow compass. Does the claim made by the appellants for payment of gratuity due to them under an award fall within Section 2(vi)(d) of the Act?

5. It is well-known that the Act was passed in 1936 to regulate the payment of wages to certain classes of persons employed in industry. The object of the Act obviously was to provide a cheap and speedy remedy for employees to whom the Act applied, inter alia, to recover wages due to them, and for that purpose, a Special Tribunal has been created. Section 15 provides for making such applications and it prescribes the manner and method in which the applications have to be tried. Section 2(vi) defines “wages” thus:

“ ‘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 or of work done in such employment, and includes—

(a) any remuneration payable under any award or settlement between the parties or order of a Court;

(b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period;

(c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name);

(d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made;

(e) any sum which the person employed is entitled under any scheme framed under any law for the time being in force”.

6. The said section further provides that certain categories of payment made to the employees will not be included in the definition of “wages” prescribed by Section 2(vi). Sub-clauses (1) and (6) are relevant for our purpose. They read thus:

“(1) Any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a Court

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(6) Any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d).”

7. It will be noticed that the definition of “wages” is an inclusive definition. It includes within its purview categories of payments prescribed by clauses (a) to (e) and excludes from its purview categories of payments prescribed by sub-clauses (1) to (6). It is plain that remuneration payable to an employee under an award or settlement amounts to wages within the meaning of this definition. Similarly, bonus paid to the employees under an award amounts to wages. That is the effect of sub-clause (1). Any additional remuneration payable under the terms of employment is covered by sub-clause (c) and it is made clear by this sub-clause that it would be treated as such additional remuneration even if it is called a bonus or by any other name. Sub-clause (1) refers to bonus which is not such additional remuneration; it is bonus to which the employees are entitled under the principles evolved by industrial adjudication. This bonus may be under a scheme of profit sharing or otherwise. If such a bonus forms part of the remuneration payable under the terms of the employment, it is included in the definition. Similarly, if such bonus is payable under any award or settlement between the parties or order of the court, it is included within the definition. Thus, it is clear that remuneration which may have been prescribed by an award amounts to wages under Section 2(vi). Likewise, bonus properly so-called, which is payable under the award, is also included within the definition prescribed by Section 2(vi). That is one aspect of the matter which it is necessary to bear in mind in dealing with the question raised before us.

8. The other consideration which is relevant is that sub-clause (6) which provides for the exclusion of certain categories of gratuity necessarily assumes that the categories of gratuity other than those specified by it would fall under Section 2(vi)(d). This sub-clause clearly says that it applies to categories of gratuity other than those specified in sub-clause (d), and that clearly means that certain categories of gratuity are included in sub-clause (d).

9. While considering the relevance and significance of this sub-clause, it may be relevant to point out that under the original definition contained in Section 2(vi) any gratuity payable on discharge was expressly excluded from its purview. The present definition which has been introduced in the Act by Act 68 of 1957 is obviously intended to widen the scope of the definition; and one of the features of this comprehensive definition is that it does take within its purview certain categories of gratuity payable to the employees.

10. Bearing in mind these considerations, let us now revert to sub-clause (d) which has to be construed for deciding the point raised before us by the appellants. This sub-clause refers to any sum which by reason of termination of employment is payable to the employee. The expression “by reason of the termination of employment” must, in the context, have the same meaning as the expression “payable on the termination of employment” which is used in sub-clause (6). In other words, gratuity which may be payable to an employee by reason of the termination of his employment would fall under sub-clause (d), provided it is shown that it is payable under any law, contract, or instrument. It is true that an award made by industrial adjudication framing a scheme of gratuity, becomes enforceable under Sections 18 and 19 of the Industrial Disputes Act 14 of 1947; and in that sense, it is a scheme which is enforceable by virtue of the operation of law. But that would not justify the conclusion that the gratuity itself is payable under any law. It is payable under an award which is made enforceable by Section 18 of the Industrial Disputes Act. Therefore, it cannot be said that the gratuity in the present case is payable under any law.

11. Can it be said to be payable under a contract is the next question to consider. Here again, though it is well-settled that awards have, on many occasions, the effect of alerting or modifying the contractual terms of employment between an industrial employer and his employees, it would be difficult to hold that the award as such is a contract. It is true that sometimes, the terms prescribed by industrial awards are treated as terms of a statutory contract which govern the relationship between the employer and the employees. But the description of the award as a statutory contract is merely intended to emphasise the fact that the terms prescribed by the award are enforceable as through they were terms of employment evolved by industrial adjudication for the parties. Therefore, we do not think it would be reasonably possible to hold that the award which frames a scheme for payment of gratuity can be said to amount to a contract within the meaning of the relevant sub-clause.

12. That takes us to the question as to whether an award can be appropriately described as an instrument which provided for the payment of gratuity. It is true that an instrument normally indicates a document executed as between the parties to it. But if the intention of the Legislature was to confine the word “instrument” to such documents alone, it would have said “under any law, contract or other instrument”. The use of the word “other” would have justified the contention that the instrument should be of the same category as a contract, and cannot take in a document which evidences adjudication by an Industrial Court. The scope of the denotation of the word “instrument” has to be judged in the light of the general object which the amended definition of “wages” is intended to achieve. As we have already indicated, when the Legislature amended the definition of “wages” in 1957, it obviously intended to widen the scope of that expression. Remunerations payable under the awards have been included within the definition; bonus payable under the awards also falls within the definition; and some categories of gratuity also fall within sub-clause (d). That is the obvious implication of sub-clause (6). Having regard to the object which the Legislature had in mind in widening the scope of the definition, we think it would not be unreasonable to hold that the word “instrument” has a wider denotation in the context and cannot be confined only to documents executed as between the parties. The scheme of the definition and the context of sub-clause (d) read with sub-clause (6) seem to suggest that the word “instrument” would include awards made by Industrial courts of competent jurisdiction. On principle, it is difficult to imagine that whereas a bonus claimable under an award can be recovered by employees by moving the authority under Section 15, a gratuity claimable under an award cannot be so recovered.

13. In construing the word “instrument” in a narrow sense, the High Court has referred to the decision in Jodrell v. Jodrell (1868-69) 7 EC 461. In that case, Lord Romilly, M.R, has observed that an order of Court is not an instrument within the meaning of the Apportionment Act, 4 and 5 Will. 4, clause 22. This decision undoubtedly shows that the word “instrument” can have a narrow meaning if the context of the statutory provision in which it occurs indicates that way. On the other hand, under the Conveyancing Act, 1881 (44 and 45 Vict., clause 41), Section 2(xiii), “instrument” includes deed, will, inclosure, award, and Act of Parliament, (vide Stroud's Judicial Dictionary, p. 1473). It is thus clear that in construing the word “instrument”, we must have regard to the context in which the word occurs. No one can suggest that the word “instrument” can always and in every case include an award or an order of adjudication. On the contrary, as we have already indicated, ordinarily, the word “instrument” would refer to documents executed by the parties. But if the context clearly indicates that the word “instrument” is used in a much larger sense, that context must be taken into account and a comprehensive interpretation must be placed upon that word. We are, therefore, satisfied that the High Court was in error in coming to the conclusion that the word “instrument” did not include an award and that made the applications made by the appellants before Respondent 1 incompetent.

14. In the result, the decision of the High Court on this point is reversed and that of Respondent 1 restored with costs throughout. Respondent 1 should now proceed to deal with the appellants' applications in accordance with law.

15. Before we part with this appeal, we ought to add that the High Court has found that though the award has been terminated by Respondent 2, it still continues to exist and is binding on the parties. This finding of the High Court has not been challenged before us by the learned Solicitor-General who appeared for Respondent 2, and we think rightly.