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Judgment
M. Anantanarayanan, C.J.—This appeal by the employer, the Management of Messrs India Hume Pipe Co., Ltd., raises a question of
considerable interest, upon which there would appear to be a paucity of authorities in the Industrial Law, both of this country and of such advanced
countries as the United States or the United Kingdom. The actual issue involved arises, with reference to the application of the definition in Section
2(aaa) of the Industrial Disputes Act, of the expression ""average pay"", as meaning the average of the wages payable to a workman.
The situation in which the issue arose before Srinivasan J. in W. P. No. 568 of 1964 (the judgment in which is reported in Palaniswami v. India
Hume Pipe Co., 1965 2 LLJ 541, is not in dispute. The company, which is the appellant before us, closed down on 30th June 1963. 47 workmen
were retrenched, consequent on the closure, and they admittedly became entitled to retrenchment compensation u/s 25(F) of the Industrial
Disputes Act. Section 25(F)(b), uses the expression ""equivalent to fifteen days'' average pay for every completed year of continuous service"", and
the question before the learned Judge was how average pay was to be computed, on the facts and under Industrial law.
Admittedly, the section which applies in Section 2(aaa) and, as we earlier noted, this defines ""average pay"" as ""the average of wages payable to
a workman"". There are then three categories set forth, and a residual category. The first is the case of ''a monthly paid workman'' the second, the
case of ''a monthly paid workman'' and the third, the case of a ''a daily paid workman''. The residual category is that of persons whose average pay
cannot be calculated upon any of these bases; in such cases, the pay is to be calculated as the average of the wages payable to a workman during
the period that he actually worked.
It was contended by the learned counsel for the employer organisation (Sri Ratan), before the learned Judge, as before us, that the residual
clause must apply to the present case, as these workmen were paid, by a practice extending for a long number of years, once every fortnight. But,
indisputably, the determinate basis of the wages was per diem; in other words, each of these workmen could claim to be ""a daily-rated worker"".
The learned Judge pointed out that the learned counsel (Sri Ratan,) did not dispute that a wage period of 14 days has been fixed, at no time.
Before us also, the relevant standing orders were referred to and scrutinised, and we can find no such decision in that regard. All that has
happened in these cases is that wages have been determined per diem, but that, as a matter of practice, the workmen were paid once every
fortnight. Under those circumstances, the learned Judge held that the residual clause did not apply, nor could it be argued that these workmen were
persons who could be said to be either ''weekly paid'' or ''monthly paid''. The learned Judge finally summed up the discussion in the following form:
The result would be that the average pay in the instant case is really equivalent to the daily wage of the worker"".
We have been at some pains to scrutinise the available authorities, to see whether any light is thrown in them upon the definition and categories in
Section 2(aaa) of the Industrial Disputes Act. We are unable to find anything which is directly in point, but we think that it can be made clear, by
virtue of a brief analysis, that, on the present facts, the decision of the learned Judge (Srinivasan J.) is correct and that, indeed, it is the only
possible conclusion.
T.S.T. Co., Ltd. v. Perumal Naidu, AIR 1958 Mad 25, a decision of the Bench consisting of Rajagopalan and Rajagopala Aiyangar JJ. is
relevant, as showing that the learned Judges came to the conclusion that where a remuneration was calculated on the basis of wage periods
extending over a month, such remuneration did not cease to be ''wages'' under the Payment of Wages Act 1936, merely because the wage period
was one month, and not a lesser period. The point which is helpful here is that the learned Judges thought that the concept of ""wage period
logically implied some period of time, on the basis of which, or in determine relation to which the remuneration was specified. Our attention has
been drawn to Section 4(1) of the Payment of Wages Act IV of 1936, and we find that the periods ""in respect of which such wages shall be
payable"" are to be the ""wage periods"" specified in that section. Our attention has also been drawn to the Minimum Wages Act XI of 1948 and to
Section 3(3)(b), which refers to minimum wages which may be fixed ''by the hour, by the day or by any larger wage period"".
We think that there is an essential difference, between a period by which the wages are paid, and the intervals at which the actual payments are
made. It is conceivable, for instance, that even in the case of an employee whose wage period is one month, and there is a determine wage on that
basis, in actual practice, he is receiving the accumulated wages once every quarter. That may be a matter of mutual convenience, and, obviously,
the ""wage period"", in its essential sense, can differ from the actual occasions of payments or the intervals separating them. This view of the
implications of the definition in Section 2(aaa) of the Act can, we think, be justified, by bringing out the features inherent on the concept of ''average
pay''.
Sri Ratan argues that we must have regard only to the strict and literal meaning of the words of the statute; according to hi, ""daily paid workmen
simply implies workmen who are paid per diem, in actual fact. The workmen in the present case were receiving their wages once every fortnight,
and they do not fall into any of the three categories of Section 2(aaa). They fall, it is claimed, only into the residual category. But, as the learned
Judge (Srinivasan J.) has shown, this mode of calculation may involve considerable hardship to several of these workmen, who have been in
employment for long periods, and whose wages have hence accelerated from low levels to higher levels. We do not think that we can accept the
contention of the learned counsel, as it is indefensible. As we have earlier stressed, the question is not whether the actual occasions of payment
were at fortnightly intervals, but whether the determinate basis of the wage was a ''wage period'' of a day, or a longer period. In the present case,
there was simply no wage determination on the basis of a fortnight, and this is not disputed. The ''wage period'' was the day, the determinate basis
was that and all that has happened is that the employer added up the totals of the daily wage each fortnight, and paid his workmen. The issue is not
materially different because of leave rules, which enabled the employees to earn wages, even when they were absent on leave, and here also we
must overrule the contention of the learned counsel for the appellant organisation. In Stroud''s Judicial Dictionary, under the word ""Paid"" we find an
illuminating note based on Gether v. Capper, (1855) 15 CB 701, to the effect that the word ""paid"" should be read as meaning ""contracted to be
paid"". In the present case, the workmen contracted with the employer and the employer contracted with them, to pay wages per diem.
We have referred to other treatises upon the specific concept of Wages, such as Kothari on ""Wages, Dearness allowance and Bonus"" and
Rothenberg on ""Labour Relations"" 1940, but we regret that we have not been able to find any reference to this particular aspect of the concept of
average pay"". But whatever might be the case with regard to some other situation in which there is a ''wage period'', in the true sense of a period
for which wages have been determined on the basis of that interval of time, in the present case, it appears to be indisputable that the wage period
was only the day and that wages were rated by the day. Consequently, we confirm the decision of the learned Judge (Srinivasan J.) in this respect
and dismiss the appeal. The first respondent will have costs in this appeal Rs. 100.
Appeal dismissed.