# MD. QASIM LARRY, FACTORY MANAGER, SASAMUSA SUGAR WORKS v. MUHAMMAD SAMSUDDIN AND ANOTHER

- **Citation:** [1964] 7 S.C.R. 419
- **Court:** Supreme Court of India
- **Decided:** 1964-03-24
- **Case number:** Civil Appeal No. 251 of 1963
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/md-qasim-larry-factory-manager-sasamusa-sugar-works-v-muhammad-samsuddin-and-3140
- **Pages:** 5

## Headnote

•
7S.C.R.
SUPREME COURT REPORTS
419
MD. QASIM LARRY, FACTORY MANAGER, SASAMUSA SUGAR WORKS
v.
MUHAMMAD SAMSUDDIN AND ANOTHER
[P. B. GAJENDRAGADKAR, C.J., K.N. WANCHOO AND K.C. DAS
GUPTA, JJ].
Wages-Industrial Dispute-Wages fixed by the Award-If
wages as defined by the Act-Payment of Wages Act, 1936 (IV
Of 1936), SS. 2(vi), 15.
In pursuance of an award made by an Industrial Tribunal
fixing the pay of the employees at Rs. 2/2/- per day, the management of the appellant had entered into an agreement with its
workmen, that the effect would be given to the wage structure
prescribed by the said award. In spite of the award and the
agreement, the appellant paid its employees only As. -/10/- per
day and that led to the present claim made by the respondents
under s. 15 of the Payment of Wages Act. They asked for an
order from the payment of wages authority directing the appellant to pay the said prescribed wages. Against the respondent's
claim it was urged by the appellant that s. 15 of the Act was
inapplicable, because the rates of wages fixed by the award did
not fall within the definition of wages prescribed by s. 2(vi) of
the Act. The authority rejected the appellant's contention. The
appellant then challenged the correctness of the conclusion of
the authority before the High Court under Art. 226 of the
Constitution. The High Court dismissed the writ petition and
affirmed the finding of the authority. It held that s. 15 was applicable to the case, because the wages prescribed by the award
did amount to wages as defined by s. 2(vi) of the Act. On appeal
by Special Leave the appellant contended that before it is held
that the wages prescribed by the award fall under s. 2(vi), it
must be shown that they constitute part of the terms of the
contract of employment, either express of implied.
Held: The argument is not well-founded. When an award
is made and it prescribes a new wage structure, in law the old
contractual wage structure becomes inoperative and its place
is taken by the wage structure prescribed by the award.
In a sense, the latter wage structure must be deemed to be the
contract between the parties, because that, in substance, is the
effect of industrial adjudication. The true legal position is that
when industrial disputes are decided by industrial adjudication
and awards are made. the said awards supplant contractual
terms in respect of matters covered by them and are substituted
by them. That being so, it is difficuit to hold that the wages
prescribed by the award cannot be treated as wages under
s. 2(vi) of the Act before it was amended. The amendment has
merely clarified what was included in the unamended definition
itself.
South Indian Bank Ltd. v. A. R. Chacko, A.LR. 1964 S.C. 1522,
referred to.
Jogindra Nath Chatter.iee and Sons, v. Chandreswar Singh,
A.LR., 1951 Cal. 29, inapplicable.
Modern M~lls Ltd. v. V. R. M:anga!vedhikar, A.LR., 1950
Born. 342 and V. B. Godse, Manager, Prabha Mills Ltd. v. R. M.
N airk [1953] 1 L.L.J. 577, approved.
L/P{D)JSCI-14(a)
1964
March 24
1964
Md. Qa.oim La"y,
Fadmy Manager,
Saaamuaa
Sugar Work<
v.
Muhammad
Samauddin and
An<>IMr
.w~;:
420
SUPREME COURT REPORTS
[1964]

## Text

•
7S.C.R.
SUPREME COURT REPORTS
419
MD. QASIM LARRY, FACTORY MANAGER, SASAMUSA SUGAR WORKS
v.
MUHAMMAD SAMSUDDIN AND ANOTHER
[P. B. GAJENDRAGADKAR, C.J., K.N. WANCHOO AND K.C. DAS
GUPTA, JJ].
Wages-Industrial Dispute-Wages fixed by the Award-If
wages as defined by the Act-Payment of Wages Act, 1936 (IV
Of 1936), SS. 2(vi), 15.
In pursuance of an award made by an Industrial Tribunal
fixing the pay of the employees at Rs. 2/2/- per day, the management of the appellant had entered into an agreement with its
workmen, that the effect would be given to the wage structure
prescribed by the said award. In spite of the award and the
agreement, the appellant paid its employees only As. -/10/- per
day and that led to the present claim made by the respondents
under s. 15 of the Payment of Wages Act. They asked for an
order from the payment of wages authority directing the appellant to pay the said prescribed wages. Against the respondent's
claim it was urged by the appellant that s. 15 of the Act was
inapplicable, because the rates of wages fixed by the award did
not fall within the definition of wages prescribed by s. 2(vi) of
the Act. The authority rejected the appellant's contention. The
appellant then challenged the correctness of the conclusion of
the authority before the High Court under Art. 226 of the
Constitution. The High Court dismissed the writ petition and
affirmed the finding of the authority. It held that s. 15 was applicable to the case, because the wages prescribed by the award
did amount to wages as defined by s. 2(vi) of the Act. On appeal
by Special Leave the appellant contended that before it is held
that the wages prescribed by the award fall under s. 2(vi), it
must be shown that they constitute part of the terms of the
contract of employment, either express of implied.
Held: The argument is not well-founded. When an award
is made and it prescribes a new wage structure, in law the old
contractual wage structure becomes inoperative and its place
is taken by the wage structure prescribed by the award.
In a sense, the latter wage structure must be deemed to be the
contract between the parties, because that, in substance, is the
effect of industrial adjudication. The true legal position is that
when industrial disputes are decided by industrial adjudication
and awards are made. the said awards supplant contractual
terms in respect of matters covered by them and are substituted
by them. That being so, it is difficuit to hold that the wages
prescribed by the award cannot be treated as wages under
s. 2(vi) of the Act before it was amended. The amendment has
merely clarified what was included in the unamended definition
itself.
South Indian Bank Ltd. v. A. R. Chacko, A.LR. 1964 S.C. 1522,
referred to.
Jogindra Nath Chatter.iee and Sons, v. Chandreswar Singh,
A.LR., 1951 Cal. 29, inapplicable.
Modern M~lls Ltd. v. V. R. M:anga!vedhikar, A.LR., 1950
Born. 342 and V. B. Godse, Manager, Prabha Mills Ltd. v. R. M.
N airk [1953] 1 L.L.J. 577, approved.
L/P{D)JSCI-14(a)
1964
March 24
1964
Md. Qa.oim La"y,
Fadmy Manager,
Saaamuaa
Sugar Work<
v.
Muhammad
Samauddin and
An<>IMr
.w~;:
420
SUPREME COURT REPORTS
[1964]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 251 of
1963. Appeal by special leave from the judgment and order
dated March 20, 1957, of the Patna High Court in Civil Revision No. 40 of 1956.
M. C. Setalvad, and R. C. Prasad, for the appellants.
The respondent did not appear.
March 24, 1964. The Judgment of the Court was delivered by
GAJENDRAGADKAR, C. J.-The short question which arises
Gaj<nlragadm, c.J.ifi this appeal is whether the term "wages" as defined by section 2(vi) of the Paymf'nt of Wages Act, 1936 (No. 4 of 1936)
(hereinafter· called 'the Act') includes wages fixed by an award
in an industrial dispute between the employer and his employees. This question has to be answered in the light of the
definition prescribed bys. 2(vi) before it was amended in 1958.
The subsequent amendment expressly provides by s. 2(vi) (a)
that any remuneration payable under any award or settlement
between the parties or order of a Court, would be included
in the main definition under s. 2(vi). The point which we have
to decide in the present appeal is whether the remuneration
payable under an award was not already included in the definition of wages before the said definition was amended.
It is common ground that between the appellant, Sasamusa
Sugar Works Ltd., and its workmen, the respondents,
an award had been made by an Industrial ·Tribunal
fixing the pay of the employees at Rs. 2/2/- per day, and
in pursuance of the said award, the management of the appellant had entered into an agreement with the respondents
that effect would be given to the wage structure, prescribed by
the said award. This agreement was subsequently published
in the Bihar Gazette as a part of the award. In spite of the
award and the agreement. the appellant paid its employees
cmly As. -/ I 0 /- per day and that led to the present claim made
by the resp~ndents under s. 15 of the Act. The respondents
contended before the payment of wages authority that the
refusal of the appellant to pay to them wages at the rate
awarded. in substance, amounted to an illegal deduction from
their wages and on that basis, they asked for an order from
the authority directing the appellant to pay to the respondents
the said prescribed wages.
The appellant raised two pleas against the respondents'
claim. It urged thats. 15 of the Act was inapplicable, because
the rates of wages fixed by the award did not fall within the
definition of wages prescribed by s. 2(vi) and it also argued
that the claim of the respondents was barred by limitation.
•
7 S.C.R.
SUPREME COURT REPORTS
421
The authority has found that s. 2(vi) includes wages prescribed
1964
by the Industrial Tribunal, and so, it has rejected the appel- Md. Qcuim LMry
!ants' contention that the applications made by the responFad-Ory MMlafl.;,
dents were incompetent under s. 15 of the Act. In regard to /aaam;-a lea
the question of limitation, the authority did not decide the
ugar v.
0
'
said question as a preliminary question, because it held, and,
Muhammad
·
· ·
· ht!
th
·
· d
t"
f f
t
Sa11111uddin and
m our op1mon, ng y,
at 11 was a m1xe ques ion o
ac
Another
and law, and so, it had to be tried after recording evidence.
Gajemlraga<lkar,
The appellant challenged the correctness of the concluO.J.
sion of the authority that the applications made by the respondents were competent under s. 15 of the Act before the
Patna High Court by filing a petition under Art. 226 of the
Constitution. The High Court has affirmed the finding of the
authority and held that s. 15 was applicable to the case,
because the wages prescribed by the award did amount to wages
as defined by s. 2(vi) of the Act. On that view, the writ petition filed by the appellant was dismissed. It is this order
which the appellant seeks to challenge before us by its present
appeal by special leave.
Section 2(vi) as it stood at the relevant time, provides.
inter alia, that 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. Mr. Setalvad for the appellant contends that before
it is held that the wages prescribed by the award fall under
s. 2(vi), it must be .shown that they constitute part of the terms
of the contract of employment, either express or implied. The
terms in question need not be express and can be implied; but
they must be terms which arise out of the contract of employment, and since an award made by an Industrial Tribum:I
cannot be said to amount to a contract of employment. the
wage structure prescribed by the award cannot fall within the
definition prescribed by s. 2<vi). That, in brief. is the ;ubstance
of the argument raised by the appellant.
We are not inclined to hold that even under the unamended definition of wages, rates of remuneration prescribed
~y an award co~ld not be included. Jn dealing with the ques·
t1on of construmg the unamended definition of the term
"wages", it is essential to bear in mind the scope and character of ~he powers. conferred on Tndu;trial Tribunals when they
deal with mdustnal disputes under the provisions of the Industrial Disputes Act. It is now well-settled that unlike ordinary
civil courts which are bound by the terms of contract between
~he parties when the)'. deal with disputes arising between them
m respect of the said terms, Industrial adjudication is not
bound to uphold the ~1'1!1s of contract between the employer
a~d the_ em.ployees. If 1t 1s shown to the satisfaction of Industrial ad1ud1cation that the terms of contract of employment,
422
SUPREME COURT REPORTS
[1964)
1964
for instance, need to be revised in the interests of social justice,
MtJ Qaaim J;any it is at liberty to consider the matter, take into account all
F~
Manage;., relevant factors and if a change or revision of the terms aps....,.....
pears to be justified, it can, and often enough it does, radically
Sugar ~orl:a
change the terms of the contract of employment. The developMu/atJmniad
ment of industrial law during the last decade bears testimony
S~nd to the fact that on references made under s. lO(i) of the
Industrial Disputes Act, terms of employment have constantly
GajendragadhM,
been examined by industrial adjudication and wherever it
O.J.
appeared appropriate to make changes in them, they have
been made in accordance with the well-recognised principles
of fair play and justice to both the parties. Therefore the basic
assumption made by Mr. Setalvad in contending that s. 2(vi)
cannot take in the wages prescribed by the award, is not wellfounded. When an award is made and it prescribes a new
wage structure, in law the old contractual wage structure becomes inoperative and its place is taken by the wage structure
prescribed by the award. In a sense, the latter wage structure
must be deemed to be a contract between the parties. because
that, in ·substance, is the effect of industrial adjudication. The
true legal position is that when industrial disputes are decided
by industrial adjudication and awards are made, the said
awards supplant contractual terms in respect of matters
covered by them and are substituted for them. That being so,
it is difficult to accede to the argument that the •vages prescribed by the award cannot be treated as wages under s. 2(vi)
of the Act before it was amended. The amendment has merely
clarified what, in our opinion, was included in the unamended
definition itself.
In this connection, we may incidentally refer to the decision of this Court in the South Indian Bank Ltd. v. A. R.
Chacko('), where it has been observed by this Court that the
very purpose for which industrial adjudication has been given
the peculiar authority and right of making new contracts
between employers and workmen makes it reasonable to think
that even though the period of operation of the award and the
period for which it remains binding on the parties may elapse
-in respect of both of which special provisions have been
made under sections 23 and 29 respectively-the 1:ew contract
would continue to govern the relations between the parties
till it is replaced by another contract This observation clearly
and emphatically bring out that the terms prescribed by an
award, in law, and in substance, constitute a fresh contract
between the parties.
This question appears to have been considered by the
Bombay and the Calcutta High Courts. In Jogerulra Nath
(') A.LR. 1964 S.C. 1522.
=
•
7 S.C.R.
SUPREME COURT REPORTS
423
{:hatierjee and Sons v. Chandreswar Singh('), the Calcutta
1964
High Court appears to have taken the view which supports Md. Qaaim Lartr.
Mr. Setalvad's argument, whereas in the Modern Mills Ltd. v. 1'""""1/ M•ll<IO'•.
V. R. Manga/vedhkar('), and in V. B. Godse, Manager, Prabha
8~;:,"if.':,t,
Mills Ltd., v. R. M. Naick, Inspector, under the Payment of
•·
Wages Act('), the Bombay High Court has interpreted s. 2(vi) s!':!::l:ii:."!.i
to include wages directed to be paid by industrial adjudication.
Another
In our opiriion, the Bombay view correctly represents the true
legal position iri the matter.
Gajendragadhr,
0.J.
The result is, the appeal fails and is dismissed. The matter
will now go back to the authority under the Act for disposal
in accordance with law. There would be no order as to costs.
(') A.I.R. 1951 Cal. 29.
Appeal dismissed
(') Al.R. 1930 Born. 342.
(') (1953] I L.L.J. 577.