Chairman of the Madras Port Trust vs Claims Authority and Others

Rajagopalan, J.—Respondents 2 to 12 were employees of the Madras Port Trust, represented by the petitioner. Of these respondents,

respondent 9 Lakshmanan, was a Maistry and the rest were shore labour Mazdoors. It was a combination of time basis and piece work basis that

was adopted by the employer for the payment of their monthly wages. The details of the emoluments payable to them were as follows : A mazdoor

was paid every month Rs. 22 at attendance wage (retainer); a Maistry was paid Rs. 27 a month, in addition, each of the employees, Mazdoors as

well as Maistries, was paid a special dearness allowance of Rs. 15 a month, a house rent allowance of Rs. 7 and a compensatory allowance of Rs.

In addition to these four items, there was a fifth, daily earnings for work done calculated on a piece rate or daily rate.

Those rates were five annas a ton for handling ship cargoes; three annas a ton for loading and unloading of wagons; four annas a ton in respect of

such loading or unloading from sheds, & Re. 1-2-0 a day for stacking, etc. while the first four items enumerated above were fixed payments, the

last was a variable factor, depending on the quantum of work done by each of the employees in a given month.

On 12-11-1951, the Central Government issued a Notification u/s 3(1)(a) and Section 4(1)(i) and Section 5(2) of the Minimum Wages Act XI

of 1948, hereinafter referred to as the Act, prescribing the minimum rates of wages for the several classes of employees of the Madras Port Trust.

What was fixed as minimum wages for the shore labour Mazdoor was a basic monthly pay of Rs. 22 and a cost of living allowance of Rs. 40. The

Maistry was entitled to get a basic pay of Rs. 27 and a cost of living allowance of Rs. 40 a month.

On 8-7-1954 an application was presented u/s 20(2) of the Act on behalf of the respondents 2 to 12, to the industrial Tribunal, Madras, as the

Authority appointed u/s 20(1) of the Act. The claims preferred in that application were summarised in paragraph 1 of the order dated 6-7-1955

the validity of which the petitioner challenged by an application under Art. 226 of the Constitution of India for the issue of a writ of certiorari. The

claims were :

(1) That respondents 2 to 12 were each entitled to the difference between Rs. 40 teed as the minimum cost of living allowance and Rs. 15 which

was actually paid to them as dearness allowance, independent of the other emoluments which these employees were paid.

(2) Payment for work done by the employees on Sundays under Rule 23 of the rules framed by the Government of India under the Act.

(3) Payment at double the ordinary rates of wages for the watch and ward work done by the Mazdoors.

(4) Payment of wages for the half hour period of waiting involved in the. Mazdoors having to work in shifts.

By his order dated 6-7-1955 the authority appointed u/s 20(1) of the Act disallowed the second and fourth of the claims mentioned above.

With reference to claim No. 1 the Authority overruled the objection of the employer, that the totality of the emoluments paid to an employee

should alone be taken into consideration, and not merely one of the components thereof, the dear-ness allowance or the cost of living allowance,

and the authority upheld the claim of the employees. The direction which the Authority issued u/s 20(3) of the Act was:

So I allow only such claim as it is within the period of 6 months earlier to the date of application, viz., 8-7-1954. A schedule will be prepared

towards the end of the judgment showing the amount due to each petitioner from 8-1-1954 to 30-6-1955 and the management is directed to pay

at the enhanced rate of Rs. 40 for each of the petitioners thereafter"".

With reference to the third claim, where the real grievance was that in calculating the basic rate which has to be doubled for overtime work the

other allowances paid to an employee should also be taken into account the Authority held:

So I hold that for purpose of calculating the overtime wage the ordinary rate should comprise the house rent allowance and also the enhanced

dearness allowance which I have now found under the first head of the claim.

The Authority, however, declined to order any payment under this head for the period upto date of its order 6-7-1955. The Authority ordered:

I direct the overtime payment to be made hereafter from the date of the judgment and be calculated as indicated above."" It was the validity of the

directions given by the Authority with reference to claims (1) and (3) that the petitioner challenged.

The main contention of the learned Advocate General, who appeared for the petitioner was that the directions given by the Statutory Authority

for payments to be made under claims 1 and 3 were beyond the jurisdiction vested in it by Section 20(3) of the Act. The further contention, with

reference to the relief given under the first claim, that the employees were entitled to the difference between Rs. 15 and Rs. 40 of the dearness

allowance independent of any of the other payments they received from their employer was that it was also in excess of the jurisdiction vested in

the Statutory Authority.

The correctness of the first of these two contentions was not challenged by the learned counsel for the contesting respondents 2 to 12. The

scope of the claim that could be preferred by an employee is limited by Section 20(2) of the Act. The scope of the relief that could be granted is

defined by Section 20(3) of the Act.

20(2). Where an employee is paid less than the minimum rates of wages fixed for his class of work under this Act, the employee himself, or any

legal practitioner or any official of a registered trade union authorised in writing to act on his behalf, or any Inspector, or any person acting with the

permission of the Authority, appointed under Sub-section (1), may apply to such Authority for a direction under Sub-section (3). ,

Provided that every such application shall be presented within six months from (Tie date on which the minimum wages became payable;

Provided further that any application may be admitted alter the said period of six months when the applicant satisfies the Authority that he had

sufficient cause for not making the application within such period.

(3) When any application under Sub-section (2) is entertained, the Authority shall hear the applicant and the employer or give them 911

opportunity of being heard, & after such enquiry if any as it may consider necessary, may, without prejudice to any other penalty to which the

employer may be liable under this Act, direct the payment to the employee of the amount by which the minimum wages payable to him exceed the

amount actually paid, together with the payment of such compensation as the Authority may think fit, not exceeding ten times the amount of such

excess and the Authority may direct payment of such compensation in cases where the excess is paid by the employer to the employee before the

disposal of the application.

What could be claimed by an employee, is only the difference between the wages actually paid to him and the minimum wages lawfully due to

him under a notification issued by the appropriate Government u/s 5(2) of the Act. The claim could only be for an amount that lawfully accrued to

the employee prior to the date on which the claim is preferred.

That claim has to be preferred within six months of the date on which the wages fell due unless under the proviso to Section 20(2) the Statutory

Authority is prepared to condone the delay. Section 20(2) does not provide for a claim in anticipation of a breach of the statutory provisions,

under which the employer is bound to pay the minimum wages, if the contract rate of wages was lower.

Section 3(1) of the Act casts the duty on the appropriate Government to fix the minimum wage. Section 3(2), Section 4 and Section 5 are

really procedural in their scope. So are Ss. 6 to 10 of the Act with which we need not concern ourselves in this case. The duty cast by Section

3(1) of the Act has to be discharged by the publication of a notification. Section 5(2) provides for that.

When such a notification is published, the duty is then cast on the employer by Section 12(1) to pay the employee a wage not less than that notified

by the Government as the minimum'' payable. Section 11(1), subject to the provisions of Sub-clauses (2), (3) and (4) thereof, directs ""minimum

wages payable under this Act shall be paid in cash."" Section 22(1) penalises the employer who contravenes the statutory duty imposed upon him

by Section 12(1). Independent of that a right"" is given to the employee by Section 20(2) to claim to recover from the employer what is lawfully due

to the employee.

The scheme of the Act and the precise language of Section 20(2) thus make it clear, that what can be claimed is something that has accrued

due to ah employee, which the employer has failed to pay in contravention of the statutory obligation imposed upon him by Section 12(1) of the

Act. u/s 20(3), it should be remembered, not only the difference between the wages actually paid and the minimum wages payable but also

compensation (or the non-payment of what might be termed the statutory wages can be ordered to be paid by the Statutory Authority.

Section 20(3) further provided for the direction of payment of such compensation even in cases where the statutory wages due are paid by the

employer to the employee before the disposal of the application preferred by the employee u/s 20(2). The scheme of the Act explains why no

statutory provision is made for enforcement of the employer''s obligation to pay the employee a wage not less than the prescribed minimum wage in

anticipation of a breach of that obligation.

Apart from the question of compensation: the direction which the statutory Authority can issue to an employer u/s 20(3) is payment the

employee of the amount by which the minimum wages payable to him exceed the amount actually paid. The claim must be in relation to the past.

The relief, the direction for which Section 20(3) provided, must be in relation to that claim. There can be no direction u/s 20(3) to pay the minimum

wage for the period subsequent to the presentation of a claim u/s 20(2). The Act has provided for that.

The claim u/s 20(2), it should be remembered, was presented on 8-7-1954. The direction given by the Statutory Authority under claim. No. 1

was for the payment of an amount as due to each of the employees for the period 8-1-1954 to 30-6-1955 and there was a further direction that

the enhanced rate of dearness allowance Rs. 40 a month should be paid even after 30-6-1955.

With reference to claim No. 3. the claim for overtime work antecedent to 8-7-1954 was negatived, and the directions was that the payment for

overtime work should be made from the date of the order of the Statutory Authority, on the basis of the calculation indicated in the order. Section

20(3) did not authorise such directions and they were wholly without jurisdiction.

The Statutory Authority appears to have) treated the claim preferred to it u/s 20(2) of the Act as an industrial dispute referred to an Industrial

Tribunal u/s 10 of the Industrial Disputes Act and to have eventually granted relief to the employees, after equating their claim to a plaint in a civil

suit presented to a civil court. The Statutory Authority purported to give the rights and obligations of the employees and the employer a

permanence, which the Act itself did not provide for Section 3(1) of the Act provided for a periodical revision of the minimum wages at intervals

not exceeding five years.

What we have said should suffice to set aside the directions given By the Statutory Authority under claims (1) and (3) in purported exercise of

the jurisdiction conferred on it by Section 20(3) of the Act.

The next question is, was there any default at all on the part of the employer, the petitioner, during the period covered by the claim 8-1-1954

to 8-7-1954?

The employees, it should be remembered, were paid during that period wages made up of five component items. Four of these, the attendance

wage, special dearness allowance, house rent allowance and the compensatory allowance, were fixed payments en a monthly basis. The fifth item,

daily earnings for work done, was a variable item dependent on the quantum of work done by the employee during the month.

It was common ground that the total of the payments actually made to each of the employees each month during the relevant period 8-1-1954

to 8-7-1954, calculated on the basis of the contractual rates never fell below the total of the minimum wages calculated on the basis of the

minimum rate prescribed by the notification dated 12-11-1951. The Statutory Authority recorded in paragraph 6 of its order :

It (the statement filed by the Management) roughly showed that workers on the whole earn between Rs. 62 to Rs. 83 per month, whereas the

notification provides only for a minimum of Rs. 62 Rs. 22 plus Rs, 40) for mazdoors and Rs. 67 (Rs. 27 plus Rs. 40) for maistries. In fact this

statement on the side of the management that the totality of the component parts exceeds the minimum rates is not disputed. It was orally admitted

before me that the workmen earn more than Rs. 82 and Rs. 67.

It was equally, common ground that while what was paid as special dearness allowance by the petitioner was Rs. 15 a month, the notification

provided for an allowance of Rs. 40 a month. Whether, in the circumstances of the case, the employees was also entitled to the difference between

Rs. 40 and Rs. 15 is the real question.

Basically what the employee is entitled to is wages. The scheme of the Act is to provide for a minimum wage for each employee. The minimum

applies to the rate. But what is payable is still the wages. The Act provides for the payment of a minimum. So long as that minimum is paid, the

contractual wage structure is left unaffected and the component parts of the wages can still be regulated by contract between the employer and the

employee.

The definition of wages it should be noticed, postulates a contractual basis express or implied. Section 2(h) runs:

Wages means all remuneration., capable of being expressed in terms of money, which would, If the terms of the contract 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, but docs not

include:

(i) the value of--

(a) any house accommodating supply of light, water, medical attendance, or

(b) any other amenity or any service excluded by general or special order of the appropriate Government;

(ii) any contribution paid by the employer to any pension fund or provident fund or under any scheme of social insurance;

(iii) any travelling allowance or the value of any travelling concession;

(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or

(v) any gratuity payable on discharge;"" Section 3 directs that the minimum rates of wages shall be fixed by the appropriate Government for the

different classes of employees. When those rates are fixed and notified u/s 5(2) of the Act, the employee''s right is to be paid at the minimum rate

applicable to him and the employer''s duty, as defined by Section 12(1), is to pay at that minimum rate to the employee.

Except for that liability, the contract between the employee and the employer is left intact, if, for instance, the contract rate of wages is higher, the

statutory right and obligation do not come into play. The statutory right of the employee itself is to receive wages at a rate not lower than the

notified minimum rate.

Learned counsel for the respondents urged that Section 4 of the Act permitted the Government to alter the contractual wage structure and fix

different minimum for the component parts ol the wages payable to an employee. We are unable to accept that contention.

What led to the enactment of the Minimum Wages Act was explained by a Division Bench of this Court in South India Estate Labour Relations

Organisation Vs. The State of Madras and Others, . This statement was approved of by the Supreme Court in Bijay Cotton Mills Ltd. Vs. The

State of Ajmer, . At page 755 (of SCR) : (at p. 35 of AIR) Mukherjee 5. (as he then was) observed:

If the labourers are to be secured in the enjoyment of minimum wages and they are to be protected against exploitation by their employers it is

absolutely necessary that restraints should be imposed upon their freedom of contract & suck restrictions cannot in any sense be said to be

unreasonable. On the other hand, the employers cannot be heard to complain if they are compelled to pay minimum wages to their labourers even

though the labourers, on account of their poverty and helplessness, are willing to work on lesser wages.

What is payable, as we said, is wages at the contract rate or wages at the prescribed minimum rate, whichever is higher. It is against this back

ground that we have to construe the scope of Section 4 of the Act. Section 4 runs:

(1) ""Any minimum rate of wages fixed or revised by the appropriate Government in respect of scheduled employments u/s 3 may consist of

(i) a basic rate Of wages and a special allowance at a rate to be adjusted, to such intervals and in such manner as the appropriate Government may

direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such worker (hereinafter referred to as

the cost of living allowance) or

(ii) a basic rate of wages with or without the cost of living allowance and the cash value of the concession in respect of supplies of essential

commodities at concession rates, where so authorised; or

(iii) an all inclusive rate"" allowing for the basle rate, the cost of living allowance and the cash value of the concessions, if any.

(2) The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rates shall be

computed by the competent"" authority at such intervals and, in accordance with such directions as may be specified or given by the appropriate

Government.

What Section 4 provides for is a rate of wages payable to an employee, which is called the minimum rate of wages. Where what is payable to

an employee has to be determined, the Act speaks of a minimum rate of wages, e.g., Section 4(1), Section 12, Section 14 and Section 15. No

doubt Section 20(2) provides for cases where an employee is paid less than the minimum rates of wages fixed for his class of work under this Act.

But then, Section 20(2) is obviously intended to cover more occasions than one of payments of wages to the same employees. Thus, the rate at

which an employee has to be paid is the unit. With reference to the minimum rate of such wages Section 4(1) of the Act refers to what that the

minimum may consist of. Section 4(1) is permissive in its scope. It is not exhaustive. It Is really procedural. Section 3(2) runs:

The appropriate Government may fix-

(a) a minimum rate of wages for time work (hereinafter referred to as a minimum time rate).

(b) a minimum rate of wages for piece work (hereinafter referred to as a minimum piece rate);

(c) a minimum rate of remuneration to apply in the case of employees employed on piece work for the purpose of securing to such employees a

minimum rate of wages on a time work basis (hereinafter referred to as ''a guaranteed time rate'');

(d) a minimum rate (whether a time rate or piece rate) to apply in substitution for the minimum rate which would otherwise be applicable, in respect

of overtime work done by employees (hereinafter referred to as ''overtime rate'')."" That again is permissive; nor is it exhaustive.

Let us take the case or respondents 2 to 12, the employees of the petitioner. They were paid partly on time basis and partly on a piece work

basis. Such a case did not fall under one of the heads (a), (b) and (c) of Section 3(2), to the exclusion of the other Sub-heads. What is permitted

u/s 4(1) of the Act has to be gathered with reference to what is declared permissible u/s 3(2) of the Act. Neither is exhaustive of the primary

obligation cast upon the appropriate Government by Section 3(1) of the Act.

What the Government did in this case when it issued the notification dated 12-11-1951 was to fix a minimum on the time basis, a monthly basis.

Did it imply that the employees need not be paid thereafter the piece work wages they were entitled to under the contract? Per contra, could it be

maintained that the piece work wages paid to the employee should be ignored in deciding whether he was paid at the minimum rate prescribed by

the notification?

The answer to both the questions, in our opinion, should be in the negative. It is for the minimum rate that Section 4(1) provided, though that rate

could consist of component parts. Section 4(1) did not postulate different minima for the several components; nor could each such minimum

constitute the minimum rate of wages within the meaning of Section 4(1). The Government had no statutory authority to provide for separate

enforceable minima for the several component in the wage structure. When the Government issued the notification, dated 12-11-1951, they should

be presumed to have exercised the lawful authority, vested in them, in the absence of any indication to . the contrary.

Taking Sections 4(1) and 3(2) together, the Government had the power to prescribe a minimum time rate where the contractual rate of wages was

wholly on the time basis. But in the case of the respondents, the contractual rate of wages was partly on time and partly on piece work basis. If the

total payable to any of the employees under the contract as wages exceeded the minimum rate applicable to them, he could certainly claim that he

should be paid at that minimum rate.

That the minimum rate notified by the Government took in two elements, the basic pay and the dearness allowance, did not alter the position, that it

was the total of the two that constituted the minimum rate of wages. The employer did not call what he paid either as basis pay or as dearness

allowance.

He called it attendance wage and"" special dearness allowance. Could it be said that because the notification prescribed payment of a basic wage,

what was paid as attendance allowance should, also be ignored? As we said, what is ''payable is wages, the totality of the component parts

thereof. When a minimum rate of wages is prescribed as payable to an employee what he is entitled to get is wages, the totality thereof, at a rate

not less than the minimum rate prescribed, the rate itself being unitary, whatever its component parts under the permissive provisions of Section

4(1) of the Act.

To test the scope of Section 4(1) and that of a notification issued u/s 5(2) the learned Advocate-General invited us to consider a hypothetical

case with reference to the public motor transport, for which the Madras Government, as the appropriate Government has issued a notification

prescribing the minimum rates of basic wages and eos6. of living allowance to the several classes of employees in the public motor transport.

Drivers, for instance, have to get a basic wage, of Rs. 40 a month. The appropriate minimum cost of living allowance for an employee paid Rs. 40

a month is Rs. 21.

Suppose an employer in the public transport industry paid his driver a monthly wage of say Rs. 75, could it be claimed that that Rs. 75 should be

treated as the basic wage, the difference between the minimum basic wage and the wage actually paid ignored, and the driver should be paid in

addition the prescribed minimum cost of living allowance of Rs. 21? That would fundamentally alter the wage structure, as pointed out by the

learned Advocate General.

Similarly, if a driver was paid Us. 50 a month as basic wage and Rs, 15 a month as clearness allowance, could it be claimed that the difference

between Rs. 50 and Rs. 40 in the basic wage should be ignored, and the difference between the dearness allowance of Rs. 15 actually paid and

the minimum prescribed cost of living allowance or dearness allowance of Rs. 21 alone should be taken into account and ordered to be paid? It

should be remembered that the notification issued with reference to the public motor transport industry applies to all employers and all employees

in that industry.

That the notification dated 12-11-51, with which we are now concerned, related only to one employer and his employees cannot obviously enlarge

the statutory power conferred upon the Government by the relevant provisions of the Minimum Wages Act.

As we pointed out, it was never disputed that the rate at which total wages were paid to each of the employees in the relevant period 8-1-

1954 to 8-7-1954, was not less than the rate of the minimum wages prescribed by the notification dated 12-11-1951. Therefore, nothing further

was due to any of the employees for that period. The Statutory Authority was therefore wrong in eliminating every other factor to direct that the

difference between Rs. 40 and Rs. 15 should be paid to each of the employees as dearness allowance.

It was not a case of a mere erroneous decision; it was an error apparent on the face of the record, when the statutory Authority held that the

difference between Rs. 40 and Rs. 15 was payable to each of the employees.

The rule is made absolute. The petition is allowed. There need, however, be no order as to costs.