# PURSHOTA.M H. JADYE AND OTHERS v. V. B. POTDAR

- **Citation:** [1966] 2 S.C.R. 353
- **Court:** Supreme Court of India
- **Decided:** 1965-10-26
- **Case number:** Civil Appeal No. 464 of 1963
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/purshota-m-h-jadye-and-others-v-v-b-potdar-3551
- **Pages:** 8

## Headnote

•
-
,
A
PURSHOTA.M H. JADYE AND OTHERS
v.
V. B. POTDAR
October 26, 1965
B
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, M. HIDAYAc
D
E
F
H
TULLAH AND V. RAMASWAMI, JJ.]
Payment of Wages Act (4 of 1936), s. 2(vi) (d)-Wages-lf inc/dues
gratuity payable under a1,varid-'lnstru1nent' 111eaning ·of.
The 2nd respondent was the printer and publisher of a newspaper
and was the employer of the appellants.
The Industrial Tribunal had made
an award framing a scheme of gratuity payable by the' 2nd respondent
to the appellants on terms and conditions prescribed ·in the award.
After
the newspaper ceased publication, the appellants applied to the 1st respondent, the Authority appointed under the payment of Wages
Act, 1936,
for payment of the gratuity due to them. The 2nd respondent raised a
preliminary objection that the. amounts claimed were not wages within
the meaning of s. 2(vi) (d) of the Act and that therefore the applications.
were incompetent.
The !st respondent rejected the contention, but the
High Court, in an application under Arts. 226 and 227 of the Comtitution upheld it.
In th·o appeal to this Court, the ~ucstion was : Did the claim made
by the. appellants for payment of gratuity due to them under the award
fall within s. 2(vi) (d) of the Act?
HELD : Section 2(vi) (d) which provides for the exclusion of certain
ca!egories of gratuity from the definition of "'vages" necessarily assumes
that the categories of gratuity other than those specilied by it would fall
under s. 2(vi) (d). Section 2(vi)(d) refers to any sum which by reason of
the termination of employment is payable to the employee.
Since
the
expression "by reason of the termination of employment" must mean in
the context "payable· on the termination of employment," gratuity, \Vhich
may be payable: to an employee by reason of the termination of his e111·
ployment, would fall under sub.cl. (d) provided it is shown that it is
payab]e under any !aw, contract or instrument.
Thougl1 it could not be
said that the gratuity in the present case was payable: under any lav./, and
it could not be held tbat the a\vard vvhich framed a :':.che1ne for pay1nent
of gratuity would amount to a contrac~ .. the scheme of the d.efinition o.f
"wages", and the corrtext of sub-cl. (d) suggest that tho word "mstrument'
would include awards made by Industrial 'Courts of competent jurisdiction.
[357 D-E. G-B, G·H; 358 E]
The scope of the denotation of the word "instrument" has to be judged
in the light of the general object which the definition of "wages" is intended to achieve.
Ordina.rily, the W.Jrd "instrument" v.rould refer
to
documents executed by the parties.
But if the context clearly indicates
that the1 \Vord "instrument" ·fts used in a much larger sense, that context
must be taken into account and a con1prehcnsive i-nterpretalion must be
placed upon the word.
When the legislature amended the definition of
"wages" by Act 68 'of 1957 it obviously intended ro widen the. scope of
that expression.
Remunerations and bonus payable under a\vnrds have
·been included within the definition.
Thc;·efore, having regard to ohe obj·"ct
which the legislature had in mind in widening the scope of the definition,
it would not be unreasonable to hold that the, word "instrument" has a
\vidcr denotation 1n the ·Context an<l cannot be confined only to docutnents
354
SUPREME
COURT REPORTS
[1966] 2 S.C.R.
executed as between the partie9.
Besides,
if
the intention
of the
A
legislature \Va& to confine the word "instrument" to such documents alone,
·it would have said "under any law, contract or other instrument". [358
G-H; 359 B-C, F-GJ

## Text

•
-
,
A
PURSHOTA.M H. JADYE AND OTHERS
v.
V. B. POTDAR
October 26, 1965
B
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, M. HIDAYAc
D
E
F
H
TULLAH AND V. RAMASWAMI, JJ.]
Payment of Wages Act (4 of 1936), s. 2(vi) (d)-Wages-lf inc/dues
gratuity payable under a1,varid-'lnstru1nent' 111eaning ·of.
The 2nd respondent was the printer and publisher of a newspaper
and was the employer of the appellants.
The Industrial Tribunal had made
an award framing a scheme of gratuity payable by the' 2nd respondent
to the appellants on terms and conditions prescribed ·in the award.
After
the newspaper ceased publication, the appellants applied to the 1st respondent, the Authority appointed under the payment of Wages
Act, 1936,
for payment of the gratuity due to them. The 2nd respondent raised a
preliminary objection that the. amounts claimed were not wages within
the meaning of s. 2(vi) (d) of the Act and that therefore the applications.
were incompetent.
The !st respondent rejected the contention, but the
High Court, in an application under Arts. 226 and 227 of the Comtitution upheld it.
In th·o appeal to this Court, the ~ucstion was : Did the claim made
by the. appellants for payment of gratuity due to them under the award
fall within s. 2(vi) (d) of the Act?
HELD : Section 2(vi) (d) which provides for the exclusion of certain
ca!egories of gratuity from the definition of "'vages" necessarily assumes
that the categories of gratuity other than those specilied by it would fall
under s. 2(vi) (d). Section 2(vi)(d) refers to any sum which by reason of
the termination of employment is payable to the employee.
Since
the
expression "by reason of the termination of employment" must mean in
the context "payable· on the termination of employment," gratuity, \Vhich
may be payable: to an employee by reason of the termination of his e111·
ployment, would fall under sub.cl. (d) provided it is shown that it is
payab]e under any !aw, contract or instrument.
Thougl1 it could not be
said that the gratuity in the present case was payable: under any lav./, and
it could not be held tbat the a\vard vvhich framed a :':.che1ne for pay1nent
of gratuity would amount to a contrac~ .. the scheme of the d.efinition o.f
"wages", and the corrtext of sub-cl. (d) suggest that tho word "mstrument'
would include awards made by Industrial 'Courts of competent jurisdiction.
[357 D-E. G-B, G·H; 358 E]
The scope of the denotation of the word "instrument" has to be judged
in the light of the general object which the definition of "wages" is intended to achieve.
Ordina.rily, the W.Jrd "instrument" v.rould refer
to
documents executed by the parties.
But if the context clearly indicates
that the1 \Vord "instrument" ·fts used in a much larger sense, that context
must be taken into account and a con1prehcnsive i-nterpretalion must be
placed upon the word.
When the legislature amended the definition of
"wages" by Act 68 'of 1957 it obviously intended ro widen the. scope of
that expression.
Remunerations and bonus payable under a\vnrds have
·been included within the definition.
Thc;·efore, having regard to ohe obj·"ct
which the legislature had in mind in widening the scope of the definition,
it would not be unreasonable to hold that the, word "instrument" has a
\vidcr denotation 1n the ·Context an<l cannot be confined only to docutnents
354
SUPREME
COURT REPORTS
[1966] 2 S.C.R.
executed as between the partie9.
Besides,
if
the intention
of the
A
legislature \Va& to confine the word "instrument" to such documents alone,
·it would have said "under any law, contract or other instrument". [358
G-H; 359 B-C, F-GJ
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 464 of
1963.
Appeal from the judgmerrt and order dated June 14, 1961
B
of the Bombay High Court in Special Civil Application No. 1285
of 1960.
S. B. Naik, Rajendra Chaudhury and K. R. Chaudhury, for
the appellants Nos. 1, 2, 4-7, 9-13, 15-17 and 19-34.
S. V. Gupte, Solicitor-General, B. K. Agarwa/a, H. K. Puri
for respondent No. 2.
The Judgment of the Court was delivered by
Gajendragadkar, C.J.
The short question of law which arises
in this appeal is whether workmen are entitled to apply to the
Authority appointed under the Payment of Wages Act, 1936 (No.
4 of 1936) (hereinafter calied 'the Act') for the recovery of the
amount of gratuity due to them under an award passed between
them and their employer.
This question has been answered by
c
D
the Bombay High Court in the negative and the appeliants.
Purshotam H. Jadye and 34 others, who have come to this Court
with a certificate granted by the said High Court, contend that
E
the view taken by the High Court is not justified on a fair and
reasonable construction of s. 2(vi)( d) of the Act.
Respondent
No. I is Mr. V. B. Potdar, the Authority appointed under the
Act, whereas respondent No. 2, the Bombay Chronicle Co. Private Ltd., is the employer of the appe!Tants.
F
Respondent No. 2, a company having its registered office at
Red House, Horniman Circle, Fort, Bombay, were the printers
and publishers of the 'Bombay Chronicle', an English Daily, which
used to be published in Bombay until the 5th April, 1959.
On
that day, the paper discontinued its publication.
The appellants
are the former employees of respondent No. 2.
In a reference
G
made to the Industrial Tribunal, Bombay under the Industrial
Disputes Act, an award was pronounced by the said Tribunal on
the 28th September, 1949, framing a scheme of gratuity payable
to the appellants. This award directed respondent No. 2, to pay
gratuity to the appellants on terms and conditions prescribed by
it. It appears that respondent No. 2 tenninated this award on
Hi
the 29th February, 1952. After the 'Bombay Chronicle' ceased
publication, the appellants moved respondent Na. r under the Act
•
•
..
'
•
JADYE V: POTDAR (Gajendragadkar, C.J.)
355
A by several applications for payment of the gratuity due to them.
B
c
D
E
F
G
H
These applications were made in July and August, 1959.
Respondent No. 2 raised a preliminary objection against the
.competence of the appellants' applications.
It was urged on its
behalf that the amounts claimed by the appellants were not wages
within the meaning_ of s. 2 (vi)( d) of the Act and as such the
applications were incompetent.
Respondent No. 1 has rejected
the contention raised by respondent No. 2, and has held that the
application.s made by the appellants were competent and he had
jurisdiction to deal with them on the merits.
Respondent No. 2 then moved the Bombay High Court by a
special civil application No. 1285/1960 under Arts. 226 and 227
of the Constitution.
It was urged before the High Court by respondent No. 2 that the view taken by respondent No. 1 about
the competence of the applications made by the appellants before
him was contrary to law.
This plea has been upheld by the High
Court with the result that the finding recorded by respondent
No. 1 on the question about the competence of the applications
made by the appellants has been reversed and the applications
themselves have been ordered to be dismissed.
It is this finding
which is challenged before us by Mr. Naik on behalf of the
appellants.
The question thus raised for our decision lies within
a very narrow compass.
Does the claim made by the appellants
for payment of gratuity due to them under an award fall within
s. 2(vi) (d) of the Act?
It is well-known that the Act was passed in 1936 to regulate
the payment of wages to certain classes of persons employed in
industry. The object of the Act obviously was to provide a cheap
and speedy remedy for employees to whom the Act
applied,
inter a/id, to recover wages due to them, and for that purpose, a
Special Tribunal has been created.
Section 15 provides for making such applications and it prescribes the manner and method
in which the applications have to be tried.
Section 2(vi) defines
'wages' thus :-
"wages" means all remuneration (whether by way
of salary, allowances or otherwise) expressed in terms
of money or capable of being so expressed which would,
if the terms of employment~ express or implied; were
fulfilled, be payable to a person employed in respect of
his employment or of work done in such employment,
and includes-
356
SUPREME COURT REPORTS.
[196 6] 2 S. C.R.
(a) any remuneration payable under any award or
settlement between the parties or order of a
Court;
(b) any remuneration to which the person employed
is entitled in respect of overtime work or holidays or any leave period;
( c) any additional remuneration payable under the
terms of employment (whether called a bonus
or by any other name);
( d) any sum which by reason of the tem1ination of
employment of the person employed is payable
under any law, contract or instrument which
provides for the payment of such sum, whether
with or without deductions, but does not provide
for the time within which the payment is to be
made;
( e) any sum which the person employed is entitled
under any scheme framed under any law for
the time being in force."
A
B
c
D
The said section further provides that certain categories of
payment made to the emplc•yees will not be included in the definition of "wages" prescribed by s. 2(vi). Sub-clauses (1) and
E
( 6) are relevant for our purpose.
They read t11us :-
" (I) Any bonus (whether under a scheme of profit
•
sharing or oilierwise) which does not form part of the
.a
remuneration payable under the terms of employment
"'II'
or which is not payable under any award or settlement between the parties or order of a Court."
F
( 6) Any gratuity payable on the termination of
employment in cases other than those specified in subclause (d)."
It will be noticed that the definition of "wages" is an inclusive
definition. It includes within its purview categories of payments
prescribed by els. (a) to (e) and excludes from its purview
categories of paymen:' prescribed by sub-els. (I) to (6). It is
plain that remuneration payable to an employee under an award
or settlement amounts to wages within the meaning of this definition.
Similarly, bonus paid to the employees under an award
amounts to wages. That is the effect of sub-cl. (I}. Any additional remuneration payable under the terms of employment is
G
H
•
,
'
.. I"-
JADYE v . . POTDAR (Gajendragadkar, C.J.)
3 5 7
A covered by sub-cl. ( c) and it is made clear by this sub-clause
that it would be treated as such additional remuneration even
.if it is called a bonus or by any other name. Sub-cl. (1) refers
to bonus which is not such additional remuneration; it is bonus
to which the employees are entitled under the principles evolved
by industrial adjudication. This bonus may be under a scheme
B of profit sharing or otherwise. If such a bonus forms part of the
remuneration payable under the terms of the employment, it is
included in the definition.
Similarly, if such bonus is payable
under any award or settlement between the parties or order of the
court, it is included within the definition. Thus, it is clear that
remuneration which may have been prescribed by an
award
C amounts to wages under s. 2 (vi). Likewise, bonus properly socalled, which is payable under the award, is also included within
the definition prescribed by s. 2(vi). That is one aspect of the
matter which it is necessary to bear in mind in dealing with the
question raised before us.
D
The other com:ideration which is relevant is that sub-cl. ( 6)
which provides for the exclusion of certain categories of gratuity
necessarily assumes that the categories of gratuity other than those
specified by it would fall under s. 2 (vi) ( d). This sub-clause
clearly says that it applies to categories of gratuity other than
those specified in sub-cl. (d), and that clearly means that certain
E
categories of gratuity are included in sub-cl. ( d).
While considering the relevance and significance of this subclause, it may be relevant to point out that under the original
definition contained in s. 2 (vi) any gratuity payable on discharge
was expressly excluded from its purview.
The present definition
F which has been introduced in the Act by Act 68 of 1957 is obviously intended to widen the scope of the definition; and one
of the features of this comprehensive definition is that it does take
within its purview certain categories of gratuity payable to the
employees.
Bearing in mind these considerations, let us now revert to
G sub-cl. ( d) which has to be construed for deciding the point raised
before us by the appellants.
This sub-clause refers to any sum
which by reason of termination of employment is payable to the
employee.
The expression "by reason of the termination of employment" must, in the context, have the same meaning as the
expression "payable on the termination of employment" which is
H
used in sub-cl. ( 6). In other words, gratuity
which may be
payable to an employee by reason of the termination of his employment would fall under sub-cl. ( d), provided it is shown that
358
SUPREME COURT REPORTS
[1966] 2 S.C.R.
it is payable under any law, contract, or instrument.
It is true
A
that an award made by industrial adjudication framing a scheme
of gratuity, becomes enforceable under ss. 18 and
19 or the
Industrial Disputes Act 14 of 1947; and in that sense, it is a
~cheme which is enforceable by virtue of the operation of law.
But that would not justify the conclusion that the gratuity itself
is payable under any law.
It is payable under an award which
B
is made enforceable by s. 18 of the Industrial Disputes Act.
Therefore, it cannot be said that the gratuity in the present case
is payable under any law.
Can it be said to be payable under a contract is the next question to consider.
Here again, though it is well-settled that awards
C
have, on many occasions, the effect of altering or modifying the
contractual terms of employment between an industrial employer
and his employees, it would be difficult to hold that the award
as such is a contract. It is true that sometimes, the terms prescribed by industrial awards are treated as terms of a statutory
contract which govern the relationship between the employer and
D
the employees.
But the description of the award as a statutory
contract is merely intended to emphasise the fact that the terms
prescribed by the award are enforceable as though they were terms
of employment evolved by industrial adjudication for the parties.
Therefore, we do not think it would be reasonably possible to
hold that the award which frames a scheme for payment of graE
tuity can be said to amount to a contract within the meaning of
the relevant sub-clanse.
That takes us to the question as to whether an award can be
appropriately described as an instrument which provided for the
payment of gratuity.
It is true that an instrument normally indiF
cates a document executed as between the parties to it.
But if
the intention of the Legislature was to conlfne the word "instrument" to such documents alone, it would have said "under any
law, contract or other instrument".
The use of the word "other"
would have justified the contention that the instrument should be
of the same category as a contract, and cannot take in a docuG
ment which evidences adjudication by an Industrial Court. The
-scope of the denotation of the word "instrument" has to be judged
in the light of the general object which the amended definition
of "wages" is intended to achieve. As we have already indicated,
when the Legislature amended the definition of "wages" in 1957,
it obviously intended to widen the scope of that expression. Remunerations payable under the awards have been included within
the definition; bonus payable under the awards also falls within
'
H
JADYE v. POTDAR (Gajendragadkar, C.J.)
359
A
the definition;· and some categories of gratuity also fall within
sub-cl. (d).
That is the obvious implication of sub-cl.
(6).
Having regard to the object which the Legislature had in mind
in widening the scope of the definition, we think it would not be
unreasonable to hold that the word "instrument" has a wider
denotation in the context and cannot be confined only to docuB ments executed as between the parties.
The scheme of the definition and the context of sub-cl. (d) read with sub-cl. (6) seem
to suggest that the word "instrument" would include awards made
by Industrial Courts of competent jurisdiction. On principle, it
is difficult to imagine that whereas a bonus claimable under an
award can be recovered by employees by moving the authority
C
under s. 15, a gratuity claimable under an award cannot be so
recovered.
D
E
F
G
H
In construing the word "instrument" in a narrow sense, the
High Court has referred io the decision in Jodre/l v. Jodrell(' ).
In that case, Lord Romilly, M.R., has observed that an order of
Court is not an instrument within the meaning of the Apportionment Act, 4 & 5 Will.
4, cl. 22.
This decision undoubtedly
shows that the word "instrument" can have a narrow meaning
if the context of the statutory provision in wbich it occurs indicates that way. On the other hand, under the Conveyancing Act,
1881 (44 & 45 Viet., c. 41), s. 2(xiii), "instrument" includes
deed, will, inclosure, award, and Act of Parliament, ( vide
Stroud's Judicial Dictionary, p. 1473)
It is thus clear that in
construing the word "instrument", we must have regard to the
context in which the word occurs. No one can suggest that the
word "instrument" can always and in every case include an award
Qr an order of adjudication.
On the contrary, as we have already
indicated, ordinarily, the word "instrument" would refer to documents executed by the parties.
But if the context clearly indicates that the word "instrument" is used in a much larger sense,
that context must be taken into account and a comprehensive
interpretation must be placed upon that word.
We are, therefore, satisfied that the High Court was in error in coming to the
conclusion that the word "instrument" did not include an award
and that made the applications made by the appellants before
respondent No. 1 incompetent.
In the result, the decision of the High Court on this point is
reversed and that of respondent No. 1 restored with costs throughout.
Respondent No. J should now proceed to deal with the
appellants' applications in accordance with law.
(0 )1868-69) 7 E. C. 461.
360
SUPREME
COURT REPORTS
[1966] 2 S.C.R.
Before we part with this appeal, we ought to add that the
A
High Court has found that though the award has been terminated
by respondent No. 2, it still continues to exist and is binding on
the parties.
This finding of the High Court has not been challenged before us by the learned Solicitor-General who appeared
for respondent No. 2, and we think rightly.
Appeal allowed.
,
'
•