Globe Detective Agency Pvt Ltd v. Globe Workers Lal Jhanda Union

i * IN THE HIGH COURT OF DELHI AT NEW DELHI + LPA No.179 of 2011 o/o DecisionDeliveredOn: 14^^ November,2011. GLOBE DETECTIVEAGENCY PVT. LTD. . • . Appellant. Through: Mr. Jagat Arora, Advocate. VERSUS GLOBE WORKERS LAL JHANDA UNION . . .Respondent Through: Mr. D.K. Agarwal, Sr. Advocate with Ms. Shagun Bhatnagar, Advocate. CORAM HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW A.K. SIKRl. Acting Chief Justice (ORAL^

¶1This appeal is preferred against the order of the learned Single Judge passed on 12.1.2011 dismissing the writ petition of the appellantherein whereby the appellanthad impugned the award dated 16.9.2002 passed by the Industrial Tribunal. The issue before the Industrial Tribunal pertains to the calculation of bonus, viz., whether bonus payable to the workman was to be calculated on the entire amount of wages or it had to be calculated on wages minus the figure of house rent allowance. In other words, the LPA No.179 of 2011 Page 1 ^ Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. question was as to wliie=t=her what would be the "salary or wage" for the purpose of bonus under the Payment of Bonus Act, 1965.

¶2Section 2(21) of the Payment of Bonus Act, 1965 which defines 'salary or wages' stipulates certain payments which are not included in the aforesaid terms and which includes ^ "the value of any house accommodation " Predicated thereupon, contention of the learned counsel for the appellant before the writ Court, as before us, was that house rent allowance was not to be included in the component of 'salary or wages' for calculating bonus payable to workman. This contention appears to be attractive. However, what was found in the present case was that the total wages paid by the appellant to its workman after including house rent allowance as well, was only minimum wage as prescribed b-y appropriate Government under the Minimum Wages Act, 1948. In fact, this minimum wage is paid under different heads and one of the heads is 'House Rent Allowance'. If the payment under House Rent Allowance is excluded, remaining wage ,4 would be less than minimum wage. In such a circumstance, if the contention of the appellant is accepted, LPA No.179 of 2.011 i the workman would get payment of bonus on wages which is less than the minimum wage. This is clearly impermissible. If such situation is allowed to prevail, clever employers would pay minimum wage under various heads which are not includible in the definition of 'salary or wage' under Section 2(21) of the Payment of Bonus Act inasmuch as other allowances, value of supply of light, water, medical attendance, concessional supply of foodgrain, travelling concession, etc. are excluded from 'salary or wage' under Section 2(21) of the Payment of Bonus Act, which is clear from the said definition, which is reproduced below: "2(21) "salary or wage" means all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee, on account of a rise in the cost of living), but does not include-

(i) any other allowance which the employee is for the time being entitled to;

(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;

(iii) any travelling concession;

(iv) any bonus (including incentive, production and attendance bonus);

(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit LPA No.179 of 2011. Page3of7 a of the employee under any law for the time being in force;

(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;

(vii) any commission payable to the employee."

¶3It is for this reason learned Single Judge rightly remarked that the issue in the present case is intertwined with fact that what the workmen are getting in the present case are only minimum wages which are treated as their salary or wages. Further, it is also rightly observed that Minimum Wages Act is a social legislation in a polity, which is a Socialist Democratic Republic and a welfare State.

¶4We are of the opinion that such objective cannot be allowed to be defeated. The position would have been different if the workmen were getting the house rent allowance, over and above, minimum wage. The learned Single Judge has referred to the judgment of the Supreme Court in the case of Airfreight Ltd. Vs. State of Karnataica, AIR 1999 SC 2459. In that case, Supreme Court held that once minimum wages are fixed, it is one pay package which is not amenable to being split, up, although the minimum wages LPA No.179 of 2011 itself may be fixed on the basis of various ingredients one of which can be requirement of house rent. The relevant portion thereof is as under: "21. As stated above minimum wage must provide not merely for bare subsistence of life but for preservation of the efficiency of the worker and so it must also provide for some measure of education, medical requirements and amenities of himself and his family. While fixing the minimum wages, the capacity of the employer to pay is treated as irrelevant and the Act contemplates that rates of minimum wage should be fixed in schedule industries with a dual object of providing sustenance and maintenance.of the worker and his family and preserving his efficiency as a worker. So it is required to take into consideration cost of bare subsistence of life and preservation of efficiency of the workers and for some measure of education, medical requirements and amenities. This cost is likely to vary depending upon the cost prevailing in the market of various items. If there are inflationary conditions prevailing in the country, then minimum wages fixed at a particular point of time would not serve purpose. Therefore, Section 4 contemplates that minimum wages fixed at a particular point of time should be revised from time to time. Section 4 postulates that minimum wages fixed or revised by the appropriate Government under Section 3 may consist of basic rates of wages and special allowance at a rate to be adjusted at such intervals in such manner as the appropriate Government may direct to accord as nearly as practicable with a variation in the cost of living index number applicable to such workers; alternatively, it permits the fixation of basic rate of wages with or without cost of living allowance and cash value of concessions in respect of supplies of essential commodities at concessional rates where so authorised; or in alternative, it permits an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of concessions, if any. The purpose of Section 4 is to see that minimum wage can be linked with increase in cost of living so that increase in cost of living can be neutralised or all inclusive rates of minimum wages can be fixed. But, from the aforesaid Sections 3 & 4, it is apparent that what is fixed is total remuneration which should be paid to the employees covered by the Schedule and not for payment of costs of different components which are taken into consideration for fixation of minimum rates of wages. It is thus clear that the concept of minimum wages does take in the factor of prevailing cost of essential commodities whenever such LPA No.179 of 2011 minimum wage is to be fixed. Tine idea of fixing such wage in tlie iigint of cost of living at a particular juncture of time and of neutralising the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index is provided for In Section 4 but V.D.A. is part and parcel of wages. Once rates of minimum wages are prescribed under the Act, whether as all inclusive under Section 4(l)(iii) or by combining basic plus dearness allowance under Section 4(l)(i) are not amenable to split up. It is one pay package. Neither the scheme nor any provision of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each necessities taken into consideration for fixing same. Hence, in cases where employer is paying total sum which is higher than minimum rates of wages fixed under the Act including the cost of living index (VDA), he is not required to pay VDA separately. However, that higher wages should be calculated as defined in Section 2(h) of the Act. Section 2(h) specifically provides that value of the following items are not required to be computed for finding out whether employer pays minimum wages as prescribed under the Act:

(i) the value of any house, accommodation, supply of light, water, medical care, or any other amenity or any service excluded by general or special order of the appropriate Government.

(ii) 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 any person employed to defray special expenses curtailed on him by the nature of his employment or

(v) any gratuities payable on discharge.

¶22But while deciding the question of payment of minimum wages, the competent authority is not required to bifurcate each component of the costs of each item taken Into consideration for fixing minimum wages, as lump sum amount is determined for providing adequate remuneration to the workman so that he can sustain and maintain himself and his family and also preserve his efficiency as a worker. Dearness Allowance is part and parcel of cost of necessities. In cases where the minimum rates of wages is linked up with V.D.A., it would not mean that it is a separate component which is required to be paid separately where LPA No.179 of 2011 the employer pays a total pay package which is more than the prescribed minimum rate of wages." To the similar effect is the judgment of the Supreme Court in case of S. Krishnamurthy Vs. Presiding Officer^ Central Govt. Labour Court, 1985 LU 133 (SC) wherein the Apex Court held that the amounts payable which are otherwise included as part of permanent wages of an employee, cannot be removed for purpose of calculating payment of bonus under the Payment of Bonus Act, 1965. We, therefore, find that the order of the learned Single Judge is without any blemish and finding no merit in this appeal, it is accordingly dismissed. telfL ACTIf^SXhllEF JUSTICE NOVEMBER 14, 201 pmc LPA No.179 of 2011 (RAJIV SAHAI ENDLAW) JUDGE f $-2 + % IN THE HIGH COURT OF DELHI AT NEW DELHI LPA 179/2011 GLOBEDETECTIVEAGENCYPVT LTD Appellant Through Mr. Rajat Arora, Advocate versus GLOBE WORKERS LAL JHANDA UNION Respondent Through Mr. D.K. Agarwal, Sr. Advocate with Ms. Tania Sebastain, Advocate CORAM: HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW ORDER

14.05.2012 CM No. 4430/2012 (Exemption) Exemption allowed,subjectto alljust exceptions. The application stands disposed of. Review Pet.133/2012 in LPA 179/2011 & CM 4429/2012

¶1The appellantseeks review of the order dated 14.11.2011dismissing the appeal. Notice of the review petition, limited to clarifying that the respondent/workmenhad concededto challengeto somepartofthe awardof the Industrial Adjudicator, was issued.

¶2Counsel for the appellant/reviewapplicant invites attention to the '-4 n \ order dated 7.05.2004 in the writ proceedings before the learned Single Judge where it is recorded that the counsel for the respondent/workmenhad conceded, firstly that the award to the extent of directing payment of provident fund and secondly that the award to the extent of awarding bonus for the period prior to referencedated 22.04.1997,was beyondthe scope of reference.

¶3Counsel for the appellant/review appUcant contends that the order dismissing the writ petition challengingthe award and the order dismissing the appealthereagainstdo not indicatethat the challengeto the awardto the aforesaid extent had been conceded.

¶4Counselfor respondentalso does not controvertthe aforesaidposition.

¶5We, accordingly clarify that the award of the Industrial Adjudicator subjectmatteroftheseproceedings,to the extentof awardingprovidentfund as well as bonus (for the period prior to reference dated 22.04.1997), is unenforceable.

¶6Counselfor the appellant/reviewapplicantfurther seeks a clarification that the balancepaymentsaforesaidunderthe award areto be releasedto the concerned workmen and not to the respondent Union. The counsel for the respondent/workmenhas no objection to the said clarificationalso. It is informed that a sum of Rs.4,00,000/- was deposited in this Court pursuant to the directionsin the appeal.If any furtheramountsare due underthe award, the appellant/review applicant to deposit the same also in this Court within four weeks thereof The said amount be released in favour of the concerned workmen.

¶7The review petition is disposed of in these terms. ACTI HIEF JUSTICE RAJIV SAHAI ENDLAW, J MAY 14, 2012 'raj' .VcoV-J 4, (I' s/V eJy" \Vr t-dA-v