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PETITIONER: CLOTHING FACTORY, NATIONAL WORKERS’ UNIONAVADI, MADRAS, REPR

       Vs.

RESPONDENT: UNION OF INDIA BY ITS SECRETARY, MINISTRY OFDEFENCE, NEW DEL

DATE OF JUDGMENT20/04/1990

BENCH: AHMADI, A.M. (J) BENCH: AHMADI, A.M. (J) FATHIMA BEEVI, M. (J)

CITATION:  1990 AIR 1383            1990 SCR  (2) 617  1990 SCC  (3)  50        JT 1990 (2)   231  1990 SCALE  (1)798

ACT:     Factories  Act, 1948--Section 59 and Presidential  Order dated September  1,  1959 and February  13,  1963--Ordinance Clothing Factory--Payment of over-time wages for piece rated workers-Computation of.

HEADNOTE:     The  controversy  that requires  determination  in  this appeal is whether piece-rated workers are entitled to  over- time  wages for work done beyond the normal hours of  44-3/4 hours and upto 48 hours in a week, i.e. for 3-1/4 hours in a week and the rate at which they should be paid the  overtime wages for those hours.     The workers of the Clothing Factory are divided into two categories viz., (i) day workers and (ii) piece-rated  work- ers. Whereas the day workers are paid wages in the scale  of Rs.260-400,  on  the basis of their  actual  attendance  the piece-rated workers are paid on actual output or  production calculated on the basis of time required for making the item at  an hourly rate to be arrived at in accordance  with  the formula prescribed for the purpose. According to the  appel- lants, the piece-rate system was introduced sometime in 1963 and  since  then the piece-rate workers were  paid  overtime wages  accordingly for work done beyond the  normal  working hours  i.e. 44-3/4 hours (8 hours per day other than  Satur- days  when the working hours are 4-3/4 hours), but the  same was  abruptly  stopped from 1983 so much so that  they  were even denied the wage at the normal rate for work done beyond normal  hours  and upto 48 hours.  Being  dissatisfied,  the appellant  Union filed a writ petition in the High Court  of Madras  praying for a suitable direction to the  respondents to pay the piece-rate workers extra or overtime wages at the rate prescribed by section 59(1) of the Factories Act if the total working hours of any workman exceeded 44-3/4 hours  in a  week. The learned Single Judge of the High Court  by  his order dated 6th December 1983, dismissed the writ  petition. An  appeal was preferred by the appellant Union  but  whilst the said appeal was yet pending disposal by the High  Court, the appellant Union filed yet another writ 618 petition in the same High Court, which was later transferred

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to  the Central Administrative Tribunal and which  has  been disposed  of  by the Tribunal by the impugned  order.  Hence this appeal by the Union after obtaining special leave.  The appeal  preferred  against the order of the  learned  single Judge of the High Court was later dismissed for default.     The workers claim that they are entitled to extra  wages for  these 3-1/4 hours at double the normal rate in  accord- ance  with  section 59(1) of the Factories Act  whereas  the Union denies such liability. Dismissing the appeal, this Court,     HELD:  There  is no dispute that the  workers  are  paid overtime wages for work done in excess of 9 hours on any day or 48 hours in any week in accordance with section 59 of the Factories  Act. This section does not provide  for  overtime wages  for work done in excess of the normal  working  hours and upto 48 hours. [624C]     Under  the  Presidential order of 1st  September,  1959, overtime  wage  was  payable for work in  excess  of  normal working  hours and upto 9 hours on any day or 48 hours in  a week  at the rate prescribed in the departmental  rules.  By the  subsequent Presidential Order of 13th  February,  1963, the  method of calculation and payment of overtime  wage  to piece  workers  was  outlined. Under these  orders  the  day workers  are allowed overtime wages for working  beyond  the normal working hours whereas piece workers are allowed piece work  profits  as may be earned by them for  working  beyond normal working hours and upto 48 hours in a week. [625A-B]     In the instant case, the grant of overtime wages for the period  in excess of the normal working hours of 44-3/4  per week  and upto 48 hours is governed by the relevant  depart- mental  rules and Section 59(1) of the Factories  Act  comes into  play only if a piece worker has worked beyond 9  hours in  a day or 48 hours in a week and not otherwise.  Further, piece  workers  are  allowed piece work profits  as  may  be earned  by them for working beyond normal working hours  and upto 48 hours in a week. [625G-H]     Union of India v.G.H. Kokil,  [1984] Suppl. S.C.C.  196, distinguished.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1929  of 1990. 619     From  the  Judgment  and Order dated  29.7.1988  of  the Central Administrative Tribunal Madras in Transferred Appli- cation No. 244 of 1987. Ambrish Kumar for the Appellant.     Anil  Dev Singh, R.B. Misra and Ms. Sushma Suri for  the Respondents. The Judgment of the Court was delivered by AHMADI. J. Special leave granted.     The  workmen of the Ordinance Clothing  Factory,  Avadi, Madras  are represented by the  petitioner/appellant  Union. The workers of the factory are divided into two  categories, namely,  (i) day workers and (ii) piece-rated  workers.  The day  workers are paid wages in the time scale of  Rs.260-400 on  the basis of their actual attendance whereas the  piece- rated  workers  are  paid on actual  out-put  or  production calculated on the basis of time required for making the item by  multiplying  the same by the hourly rate worked  out  by dividing the mean of the time scale by monthly working hours e.g., Rs.330 + 195 hours = Rs.1.69 (Rs.330 being the mean of the  time scale of Rs.260-400 and 195 hours being the  total

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monthly hours).     The  appellant-Union  contends  that  the  daily  normal working hours of the workmen are 8 during the week except on Saturdays  when the working hours are 4-3/4 only.  Thus  the total  working hours during the week comes to 44-3/4  hours. If  the piece-rated workers are required to work beyond  the aforesaid normal working hours they are entitled to overtime wages  under  section 59 of the Factories  Act,  1948.  That section, in so far as is relevant, reads as under: "Section 59(1)’--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." This sub-section postulates payment of extra wages at  twice the ordinary rate of wages for those workers of the  factory who  are required to work for more than 9 hours in a day  or for more than 48 hours in a week. The appellant-union  filed a Writ Petition No. 2356 of 1985 in the 620 High  Court  of Madras praying for an  appropriate  writ  or direction to the respondents to pay the piece-rated  workers extra  or overtime wages at the rate prescribed  by  section 59(1)  if  the total working hours of any  workman  exceeded 44-3/4  hours in a week. The appellant-union contended  that the  piece-rate system was introduced sometime in  1963  and since  then the piece-rate workers were paid overtime  wages accordingly  for work done beyond the normal  working  hours but the same was abruptly discontinued from 1983; so much so that  they were even denied the wage at the normal rate  for work done beyond 44-3/4 hours and upto 48 hours, i.e,  3-1/4 hours.  It  is, however, admitted that if  the  workmen  are required  to work beyond 48 hours in a week, they  are  paid extra  wages in accordance with section 59(1) of the  Facto- ries Act. Thus the controversy is in respect of the rate  at which  piece-rate workers should be paid wages for the  work put  in between 44-3/4 and 48 hours in a week.  The  workers claim they are entitled to extra wages for these 3-V4  hours at  double the normal rate in accordance with section  59(1) of  the Factories Act. In support reliance is placed on  the Ministry  of Defence letter No. F. 8(5)/56/D(Civ. II)  dated 1st  September, 1959 which inter alia provides that  in  all cases  where overtime pay is admissible to civilian  person- nel,  both  under the provisions of the  Factories  Act  and Departmental Rules, the overtime pay should be calculated as under:    (i) For work in excess of normal working hours and upto 9 hours  on  any day or 48 hours in a week, overtime  will  be paid  at the rate prescribed in the departmental rules.  For calculation  of overtime pay under this item only basic  pay and Dearness allowance shall be taken into account.    (2) For work in excess of 9 hours on any day or 48  hours in  a week overtime will be paid at the rates prescribed  in the  Factories Act. For calculating overtime pay under  this item  total pay including all allowances will be taken  into account. By  a subsequently communication dated 13th  February,  1963 the Ministry clarified that having regard to the revision of piece  work  rates effected in the Ordinance  Factories  co- relating them to the monthly scales of pay sanctioned by the Ministry’s letter dated 16th January, 1954, the  distinction between High Paid and Low Paid piece workers stood abolished and keeping in mind the Ministry’s letter dated 1st  Septem- ber, 1959, the President was pleased to sanction the follow- ing  methods  of  calculation and  payment  of  overtime  to

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piece-rate workers: 621   (i) Piece workers under P & A Regulations Part I 1923. (a) No  overtime will be admissible for working overtime in  the day  shift.  But for the purposes of  distribution  of  P.W. profits, the time wages element in respect of overtime  upto 9 hours per day or 48 hours a week will be determined at the rate  of P/200 per hours, where ’P’ represents  the  monthly basic pay and dearness pay where admissible. (b)  An extra 1/2 hour pay calculated at the hourly rate  of 1/200 of the monthly basic pay or the monthly basic pay  and dearness pay, where admissible, for every hour of systematic overtime  worked  on the night shifts in addition  to  their piece work earnings. (ii) Piece workers under the Factories Act For each hour of overtime in excess of 9 hours on any day or 48  hours  in  a week a piece worker will be  1/200  of  the monthly  basic  pay  plus 25% of basic pay  plus  twice  all allowances.  In other words, if ’P’ represents  the  monthly basic pay and ’D’ stands for all allowances such as dearness allowance, house rent allowance, compensatory (city)  allow- ance,  overtime  for  each hour will  be  P/200  +  1/4P/200 +2D/200. This order was directed to take effect from 1st March, 1954. Thereafter,  by a corrigendum issued on 21st October,  1965, sub-paragraph (1) of the Ministry’s letter of 1st September, 1959 was directed to be substituted w.e.f. 2nd July, 1965 by the following: "1.  For work in excess of normal working hours and  upto  9 hours  on  any day or 48 hours in a week, overtime  will  be paid  at the rate prescribed in the departmental rules.  For calculating  overtime pay under this item, basic pay,  dear- ness  allowance, special pay, personal pay, pension (to  the extent  taken into account for the fixation of pay)  in  the case  of re-employed pensioner and city compensatory  allow- ance  shall  be taken into account.  House  Rent  Allowance, conveyance   allowance,  traveling  and  daily   allowances, permanent travelling allowance, clothing allowance,  uniform allowance,  washing allowance and children education  allow- ance shall not be included." 622 But  by a Circular No. 1823/LB dated 2nd February,  1983  it was  stated  that orders had since been  received  from  the Ordinance  Factory  Board ’to stop payment  of  Departmental Overtime when piece workers work beyond normal working hours and  upto 9 hours a day or 48 hours a week’. It was  further clarified that they would be entitled to piece work earnings only for the period they work extra hours. Thus the  payment of departmental overtime for January, 1983 in February, 1983 was  stopped. However, with regard to workmen of  the  Ordi- nance  Factories and other industrial  establishments  under the  Defence Ministry governed by the Factories Act, it  was laid  down by the communication dated 11th  September,  1987 that such workmen shall be entitled to overtime allowance at time  rate for work done in excess of prescribed  hours  and upto  48  hours a week, in accordance with  Ministry’s  O.M. dated  25th June, 1983, but it was clarified that  the  time rate  of wages will be calculated with reference to  pay  in the  revised  scale  w.e.f. the date  the  worker  has  been brought  on the revised scale introduced from  1st  January, 1986.  In the light of the above, the  appellant-union  con- tends that as the prescribed hours of work were 44-3/4 hours per  week,  the workmen were entitled to  overtime  wage  or allowance  for  work done beyond 44-3/4 hours  and  upto  48 hours  a week at double the ordinary rates, which  has  been

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wrongly and illegally discontinued.     The  case set up by the respondents is that the  workers of the petitioner/appellant-union are mostly doing tailoring work, stitching uniforms, tents, parachutes, covers etc., in the  Ordinance Clothing Factory, a Govt. of India  Undertak- ing, and are paid wages on piece rate basis. It is submitted that while fixing the piece work rate the labour involved in the production of each article is analysed in detail and the basic time is determined to which 25% incentive is added and the  wage  is  paid on the basis of time  so  calculated  by taking the arithmatic mean of the scale to which the  worker belongs and dividing the same by the figure 195 representing the  number of standard hours for a month. Thus if  a  piece worker  completes his job allotted to him he would earn  his basic  time wage plus an extra 25% as incentive. It is  fur- ther stated that the payment of overtime wages for the  work done  beyond the normal working hours of 44-3/4 and upto  48 hours  in a week is regulated by the Departmental Rules  and for the period exceeding 48 hours in a week or 9 hours on  a single  day  is  regulated as per the  requirements  of  the Factories  Act.  According to the  respondents  the  Defence Ministry  letter  of 1st September, 1959 as amended  by  the corrigendum  of 21st October, 1965 does not apply  to  piece workers  but their case in regard to the grant  of  overtime payment is governed by 623 the  Defence  Ministry letter dated 13th February,  1983  as amended  by the Corrigendum of 18th January, 1970.  In  fact the  former letters apply to day workers who are paid  wages on   the  basis  of  attendance.  Thus  according   to   the respondents piece workers are not entitled to overtime wages at  double the rate for work done in excess of 44-3/4  hours upto  48 hours in a week because they are entitled to  piece work  profit  in the form of earning which  is  included  in their wage structure itself to compensate them for the extra working  hours upto 48 hours in a week. Yet on account of  a mistake  such payment was made till December, 1982 but  when it  came to light the same was discontinued by the  Circular letter  dated  2nd February, 1983. This  discontinuance  was challenged in Writ Petition No. 10095/83 in the Madras  High Court which was repelled by Mohan, J. by his order dated 6th December,  1983.  The appeal filed against the  decision  of Mohan,  J.  was  still pending in the High  Court  when  the proceedings  giving  rise to this appeal were  initiated  by this  Union. Lastly it is pointed out that according to  the terms  of section 59 of the Factories Act, the  question  of payment of overtime at double the rate can arise any if  the piece worker has worked for more than 9 hours per day or  48 hours  per  week and not to cases of the present  type.  The respondents, therefore, pray that the present appeal is  not maintainable and deserves to be dismissed.     In the rejoinder filed on behalf of the  appellant-union it is contended that the 25% incentive is not to  compensate for overtime work beyond 44-3/4 hours and upto 48 hours in a week  but is a measure to provide for rest intervals,  minor mechanical  breakdowns,  tools  sharpening  or  grinding  or hold-ups  for want of raw-materials, etc., to arrive at  the operational  time for production of an item. The  appellant, therefore,  contends  that the contention that  the  letters dated  1st  September, 1959 and 12th October,  1969  applied only to the monthly-rated day workers is misconceived.  This is apparent from the subsequent letter dated 13th  February, 1963  as amended by the corrigendum of 18th  January,  1970. Therefore, according to the appellants, the contention  that piece-work  profit  is incorporated in  the  wage  structure

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applicable to piece rated workers is not correct and clearly manifests that the discontinuance of overtime is based on  a wrong  understanding  of  the relevant  orders.  In  support strong reliance is placed on this Court’s decision in  Union of  India v.G.H. Kokil, [1984] Suppl. SCC 196. Lastly it  is contended that the respondents were not justified in abrupt- ly discontinuing the grant of overtime wages on the  pretext of  a  so-called ’mistake’ and their action in so  doing  is clearly high-handed amounting to unfair labour practice  not expected from a governmental 624 undertaking.  It is also contended that the circular  letter of  2nd February, 1983 is a document of doubtful origin  and can  not in any case override the prior orders contained  in the letters of the Ministry of Defence earlier referred  to. The  appellants, therefore, contend that the impugned  deci- sion  needs to be set aside and the overtime payments  which have  been  unilaterally and  arbitrarily  discontinued  re- stored.     From  the above resume it is clear that the  controversy is limited to the question of non-payment of overtime  wages for  work done beyond the normal hours of 44-3/4  hours  and upto  48  hours in a week i.e., for 3-14 hours  in  a  week. There is no dispute that the workers are paid overtime wages for work done in excess of 9 hours on any day or 48 hours in any week in accordance with section 59 of the Factories Act. This  section does not provide for overtime wages  for  work done  in  excess  of the normal working hours  and  upto  48 hours.  In Kokil’s case (supra) the point for  consideration was  whether  the employees working in the  factory  of  the Indian  Security  Press, Nasik, were  entitled  to  overtime wages  under section 59 of the Factories Act read with  sec- tion 70 of the Bombay Shops & Establishments Act, 1948,  for the work done beyond the normal working hours. According  to them their normal working hours were 44 per week, they  were required to work in excess thereof but they were paid  over- time  wages for the extra hours of work at the  basic  rates though  they were entitled to overtime wages at  double  the normal  rate.  In that case three contentions  were  raised, viz., (i) since none of the respondents was a ’worker’ under section  2(1) of the Factories Act, their case was not  gov- erned by section 59 of the said Act read with section 70  of the  Bombay  Shops & Establishments Act; (ii)  assuming  the respondents were entitled to claim the benefit of section 59 read  with section 70 as aforesaid even though none of  them was  a worker, section 59 became inapplicable by  virtue  of Rule  100  made under section 64 of the Factories  Act;  and (iii)  since none of the respondents was a  ’workman’  under section  2(s)  of  the Industrial Disputes  Act,  1947,  the application  under section 33C(2) thereof was not  maintain- able. This Court, on a true interpretation of section 70  of the  Bombay Shops & Establishments Act, came to the  conclu- sion  that  the non-obstante clause found  therein  made  it clear that section 59 would apply and the same  non-obstante caluse kept out the application of section 64 read with Rule 100.  On the third question this Court confirmed the  Labour Court’s finding that the respondents were workmen under  the Industrial  Disputes  Act. In this view of the  matter  this Court  held  that the employees were  entitled  to  overtime wages under section 59 of the Factories Act. 625     Now under the Presidential order of 1st September,  1959 overtime  wage  was payable ’for work in  excess  of  normal working  hours and upto 9 hours on any day or 48 hours in  a week’  at the rate prescribed in the departmental rules.  By

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the subsequent Presidential order of 13th February, 1963 the method of calculation and payment of overtime wage to  piece workers was outlined. Under these orders the day workers are allowed overtime wages for working beyond the normal working hours  whereas piece workers are allowed piece work  profits as  may be earned by them for working beyond normal  working hours and upto 48 hours in a week. This is clear from clause (i) of the letter dated 13th February, 1963. Even the Manual of Cost Accounting (1986) meant for Ordinance and  Ordinance Equipment  Factories  indicates that in the  case  of  piece workers  no  separate payment for  overtime  is  permissible under the departmental rules for day shift workers but  they are entitled to piece work earnings only. That is why in the earlier Writ Petition No. 10095 of 1983 filed in the  Madras High  Court  a  contention was based on Article  14  of  the Constitution  that the management was guilty of  discrimina- tion inasmuch as day workers of day shifts were entitled  to overtime  wages whereas piece workers were denied the  same. The  contention was turned down by Mohan, J. whose  decision was challenged in appeal before the High Court which  appeal has since been dismissed for default. It is indeed  surpris- ing why another Writ Petition No. 2356 of 1985 was filed  in the  same  High Court, notwithstanding the pendency  of  the said appeal, which writ petition on transfer to the  Central Administrative  Tribunal came to be disposed of by  the  im- pugned  judgment and order. In fact it is doubtful  if  this second Writ Petition would have been entertained in view  of the  earlier  decision of Mohan, J. rendered  several  years back  soon after the discontinuance of grant of overtime  by the  circular letter of 2nd February, 1983 merely because  a different union was espousing the cause, since the cause was identical.  The  decision of this Court in Kokil’s  case  is clearly distinguishable on facts. 1n that case there was  no dispute that if section 59 of the Factories Act applied  the workers were entitled to overtime wages for work done beyond the  normal  hours and upto 48 hours. That  would  naturally depend on the relevant service rules since section 59 stric- to  sensu  applies to cases of overtime work done  beyond  9 hours  a  day or 48 hours a week. In the  present  case  the grant  of  overtime wages for the period in  excess  of  the normal working hours of 44-3/4 per week and upto 48 hours is governed  by  the relevant departmental  rules  and  section 59(.1) of the Factories Act comes into play only if a  piece worker  has worked beyond 9 hours in a day or 48 hours in  a week  and not otherwise. Further, piece workers  are  denied overtime wage for these 3-1/4 hours of work in a week 626 because  this factor is taken care of in the calculation  of the  piece rate. We are, therefore, of the opinion that  the ratio of Kokil’s case has no application to the facts of the present case.     For  the above reasons we see no merit in  this  appeal. The  appeal, therefore, fails and is dismissed. No order  as to costs. Y.  Lal                                        Appeal   dis- missed. 627