The Additional Sessions Judge, Referring Officer vs Pramanand Sanghi

Munikanniah, J.—One Pramanand Sanghi has been tried by the VIth City Magistrate Hyderabad for an offence u/s 36 read with Section 41 of the Hyderabad Shops and Establishments Act (No. X of 1951) and convicted and sentenced to pay a fine of Rs. 20/- or in default to suffer simple imprisonment for 5 days. This matter has come on a reference made by the learned Chief City Magistrate u/s 438, Cr.P.C.

The learned Chief City Magistrate who heard the revision petition filed by the accused is of the view that in a case where an employee is paid salary he cannot be considered as an employee receiving wages, as the decision of the Andhra Pradesh High Court in Cr.R.C. No. 33 of 1956, In Re Bhagvandas, will govern the case and as also the amendment of the definition of the word ''wages'' contained in Section 2(vi) of the Payment of Wages Act, 1936 cannot apply retrospectively, the order of the VI City Magistrate convicting the accused requires to be set aside.

The accused is a petrol dealer trading under the style of ''Prem Brothers''. The employee whom he discharged on 21.3.1958 is Sheik Mohammed. The latter had been in the service of tile former from 23.12.1949. He had been paid a salary of Rs. 65/- at the time when he was discharged. The complaint made by the discharged employee is that he was not paid gratuity which he is entitled to receive under the provisions of Section 36 of the Hyderabad Shops and Establishments Act. The accused does not deny the non-payment of the gratuity; but contends that he is not under an obligation to pay gratuity to an employee who is only entitled to payment of salary and not to wages. It is on this contention there has been a difference of opinion between the trial court and the revisional court. The learned VIth City Magistrate held that even though the Andhra Pradesh High Court followed the decision reported in In Re: K.V.V. Sarma, Manager, Gemini Studios, Madras, , the view of the same High Court in a latter decision in The Managing Director, T.S.T. Co., Ltd. Vs. R. Perumal Naidu and Another, , has to be preferred in that that latter decision of Madras High Court dissented from the earlier one. As already adverted to, the learned Chief City Magistrate was unable to agree with this view of the trial court.

It is necessary to have to state the submission of Mr. Kulkarni, the learned Counsel for the petitioner (accused) in order to show how the definition of ''wages'' contained in the Payment of Wages Act (IV of, 1936) has become important in the determination of this case. The learned Counsel for the petitioner while aware that what is complained of against tile accused is the non-compliance of the provisions of Section 36 that led to the application of the penal consequence contained in Section 41 of the Hyderabad Shops and Establishments Act, he relied upon the employment of the term "average wages" occurring in Sub-section (1) of Section 36. His submitted that inasmuch as Section 2(20) of the same enactment adopts the definition of ''wages'' as contained in the. Payment of Wages Act the case of person who is paid wages but not salary, is distinguishable and in the latter instance, the employer cannot be compelled to pay gratuity. Sub-section (1) of Section 36 which is material may be read. It is as follows:

No employer shall, except for misconduct, dispense with the services of an employee who has been in his continuous employment for a period of not less than six months (including the part of the period, if any, before the commencement of this Act), without giving such employee n gratuity amounting to 15 days'' average wages for each year of continuous service, subject to maximum of averages for 15 months.

At the relevant period viz., when the petitioner was prosecuted, the definition, of "Wages" contained in Section 2(vi) of the Payment of the Wages Act was as follows:

"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, whether conditionally upon the regular attendance, good work or conduct or other behaviour of the person employed or otherwise, to a person employed in respect of his employment or of work done in such employment, and includes any bonus or other additional remuneration of the nature aforesaid which would be so payable and any sum payable to such person by reason of the termination of his employment.

Also laying stress on the mode of calculation mentioned in Section 36 of the Hyderabad Shops and Establishments Act which is 15 days wages for each year, it is argued that the wage earners are alone within the purview of Section 36 but not the salaried employees.

In support of this argument, reliance is placed on the decision in In Re: K.V.V. Sarma, Manager, Gemini Studios, Madras, . In that case the court was finding out whether the Factory Act applied to the studio and whether the studio was a ''factory''. The court was concerned with finding out whether there were more than 20 workers. Therefore, it had to make out which of the persons employed in the studio were ''workers''. In such an effort to find out this, the Court had to consider the definition of the word ''wages'' occurring in the Payment of Wages Act The Court, of course came to the conclusion that persons who are paid salaries monthly are to be excluded from the definition of workers''. No doubt, the conclusion arrived at by Govinda Menon, J. in that decision has given room for the argument that a distinction is sought to be made between salaried employees as if the whole class of them do not at all come under the definition of persons employed for wages and workers. But this, as has been mentioned by the trial court in the instant case, has been considered in a latter decision by a Division Bench of the Madras High Court consisting of Rajagopalan and Rajagopala Ayyangar, JJ. in The Managing Director, T.S.T. Co., Ltd. Vs. R. Perumal Naidu and Another, On examination of the several provisions of the Payment of Wages Act which has a bearing, the definition of ''wages'' has also been gone into by this Division Bench. The learned Judges have been of the view that a combined reading of Sections 2(vi) and 4(2) will lead to the irresistible conclusion that ''wages'' as defined In Clause (vi) of Section 2 of the Act has no further limitation, that the definition snail not apply only to the wages which exceed Rs. 200/- a month in respect of the wage period (Vide Section 1(6) of the Payment of Wages Act which according to Section 4 shall not exceed one month), but will cover the cases of wages upto p. 348 (of Mad LJ) : (at p. 27 of AIR) as hereunder:

We do not see how this could be construed as by implication providing that in every case where the remuneration was calculated on the basis of wage periods extending over a month the employees in receipt of wares so calculated were notwithstanding that the quantum of wages payable to them was less than that provided by Section 1(6) were also outside the enactment. In our judgment the remuneration payable to a workman which is wages as defined by Section 2(vi) of the Act does not cease to be wages as so defined merely because the wage period on the basis of which remuneration is calculated is the month". This Division Bench also noticed the earlier decision in In Re: K.V.V. Sarma, Manager, Gemini Studios, Madras, and distinguished it as a case which was only concerned with the question whether a film studio was a ''factory'' within the meaning of the Factory Act (LXIII of 1948) and as one with which they could not agree in the construction of Section 2(vi) of the Payment of Wages Act. It is also pertinent to have to point out that the decision reported in The Managing Director, T.S.T. Co., Ltd. Vs. R. Perumal Naidu and Another, was concerned only with the definition of ''wages'' before the amendment of Act LXVIII of 1957. It is instructive to note that amended definition of ''wages'' has placed beyond doubt by amplyfying the meaning of the word ''remuneration'' by the addition of the following words in brackets viz., "whether by salary, allowance or otherwise". This also supplies the justification'' that the un-amended definition of ''wages'' meant what is made explicit by the amendment. After the amendment, the question whether ''remuneration'' mentioned in the definition of wages in Section 2(vi) also includes salaries within the limits as mentioned, in Section 1(6) is now placed beyond doubt That the same was also the position even before the amendment but was made out to be so by implication and interpretation, in my view, could be said to be the effect of the ratio of the decision in The Managing Director, T.S.T. Co., Ltd. Vs. R. Perumal Naidu and Another,

The latter view of the Madras High Court has found favour also with the Patna High Court as is evident from the decision in Manager, Searchlight Press Vs. Factories Inspector, . They considered that the latter pronouncement of the Madras High Court should be taken as the prevailing law. A division Bench of the Assam High Court consisting of Sarjoo Prosad, C.J. and Deka J. had occasion to consider in Mani Bhushan v. Sunil Kumar (S) AIR 1957 gua 162 the ambit of the definition given in the Payment of Wages Act as it stood before the amendment. They were concerned with the jurisdiction of the authority under the Payment of Wages Act as the employees received monthly payments. The contention before the learned Judges had been that those were not paid wages, but received salaries. The learned Chief Justice relying upon the decision in A.V. D''costa Vs. B.C. Patel and Another, , applies even to monthly payments upto a limit, held accordingly.

The state of authority as well as the examination of the language of the Section of Payment of Wages Act do, in my view, impel the conclusion that salaries payable monthly to the extent of Rs. 200/- fall under the definition of ''wages'' contained in Section 2(vi) of the Payment of Wages Act and therefore a person who is paid only a Salary of Rs. 65/- monthly cannot be taken out as being outside the scope of Section 38 of the Hyderabad Shops and Establishments Act.

I may now refer to the decision in Cr.R.C. No. 33 of 1956 of this High Court. There, the conviction of a shop-owner for contravention of the provisions of Section 20(4) and Section 27(2) of the Hyderabad Shops and Establishments Act was questioned. The decision in In Re: K.V.V. Sarma, Manager, Gemini Studios, Madras, had been relied upon and cited before the Court. But the latter decision viz. The Managing Director, T.S.T. Co., Ltd. Vs. R. Perumal Naidu and Another, was not brought before the Court obviously because it was not then available for reference. That fact has led to this Court of necessity to follow the binding decision rendered earlier than the re-constitution of the Andhra High Court. But the same cannot be the case now as that decision is not followed even by that High Court.

In view of the aforesaid discussion, I am unable to agree with the Chief City Magistrate, Hyderabad that the order of the trial Court needs to be set aside. It follows that this reference has to be rejected. The conviction and sentence imposed on the accused will therefore stand.