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2001 DIGILAW 739 (MAD)

Modern Theatres Limited v. Presiding Officer

2001-07-10

K.GNANAPRAKASAM, R.JAYASIMHA BABU

body2001
Judgment :- R JAYASIMHA BABU, J. The contention of the employer-petitioner is that even after the expiry of the period of operation of the award passed by the Industrial Tribunal, until the award is terminated by a notice of termination as contemplated by Section 19(6) of the Industrial Disputes Act, 1947 (hereinafter referred to as "the I.D. Act"), the award would continue to be in "operation" and, therefore, a notification issued under the Minimum Wages Act prescribing the rates of wages for workmen who are parties to the award, even when the wages prescribed under the notification are higher than that provided for in the award, would be of no effect. The petitioner is a company which owns a studio, and in a dispute between it and its workmen with regard to the scale of wages payable to them an award was passed by the Industrial Tribunal on August 9, 1972. The period for which the award was to be in operation was one year as provided under Section 19(3) of the Industrial Disputes Act, which reads thus : "19.(3) An award shall, subject to the provisions of this Section, remain in operation for a period of one year (from the date on which the award becomes enforceable under Section 17-A) : Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit : Provided further that the appropriate Government may before expiry of the said period, extend the period of operation by any period not exceeding one year at a time as it thinks fit so however, that the total period of operation of any award does not exceed three years from the date on which it came into operation." It is not the case of the petitioner that the period of operation of this award was at any time extended by the Government. The award, therefore, remained in operation for a period of one year, viz., from July 13, 1972, to July 12, 1973. The award clearly was not operative for the purpose of Section 19(3) of the Industrial Disputes Act when the notification dated November 24, 1982, under the Minimum Wages Act was published fixing the rates of wages for employees in the cinema industry. The Minimum Wages Act, 1948, was enacted to provide for fixing the minimum rate of wages in certain employments. The Minimum Wages Act, 1948, was enacted to provide for fixing the minimum rate of wages in certain employments. Section 12 of the Minimum Wages Act provides that : "(1) Where in respect of any scheduled employment a notification under Section 5 is in force, the employer shall pay to every employee engaged in a scheduled employment under him wages at a rate not less than the minimum rate of wages fixed by such notification for that class of employees in that employment without any deductions except as may be authorised within such time and subject to such conditions as may be prescribed. (2) Nothing contained in this Section shall affect the provisions of the Payment of Wages Act, 1936 (4 of 1936)." Section 25 of that Act deals with contracting out and it reads as under : "Contracting out. - Any contract or agreement, whether made before or after the commencement of this Act, whereby an employee either relinquishes or reduces his right to a minimum rate of wages or any privilege or concession accruing to him under this Act shall be null and void in so far as it purports to reduce to the minimum rate of wages fixed under this Act." It is thus clear that the object of the Minimum Wages Act is to establish a floor level of wages for all employees in the industries set out in the Schedule to the Act. The wages fixed in accordance with the provisions of that Act and notified, therefore, constitute the statutory minimum scale of wages payable to the employees in those sectors of employment. As disputes regarding wages need resolution even in sectors in respect of which no notification under Section 5 of the Minimum Wages Act had been issued, and/or higher wage rates are claimed, the provisions of the Industrial Disputes Act are being resorted to for the purposes of settling the scale of wages, where bipartite agreements had not been feasible of achievement. However in cases where these disputes are referred to the Industrial Tribunal, after a notification is issued under the Minimum Wages Act, the Tribunal certainly would not have the power to fix rates of wages less than the rate provided in the notification issued under the Minimum Wages Act. The rates so fixed in those notifications would have the effect of being low and would bind the adjudicating forums. The rates so fixed in those notifications would have the effect of being low and would bind the adjudicating forums. Sub-clause (2-A) of Section 3 of the Minimum Wages Act deals with the period of overlap the period during which an industrial dispute in relation to wages is pending or in respect of which the award has been passed and is in operation and during the pendency of which proceeding or the period of operation of the award a notification is issued under the Minimum Wages Act. Sub-clause (2A) of Section 3 of the Minimum Wages Act provides : "Where in respect of an industrial dispute relating to the rate of wages payable to any of the employees employed in a scheduled employment, any proceeding is pending before a Tribunal or National Tribunal under the Industrial Disputes Act, 1947 (14 of 1947), or before any like authority under any other law for the time being in force, or an award made by any Tribunal, National Tribunal or such authority is in operation, and a notification fixing or revising the minimum rates of wages in respect of the scheduled employment is issued during the pendency of such proceedings or the operation of the award, then, notwithstanding anything contained in this Act, the minimum rates of wages so fixed or so revised shall not apply to those employees during the period in which the proceeding is pending and the award made therein is in operation or, as the case may be, where the notification is issued during the period of operation of an award, during that period, and where such proceeding or award relates to the rates of wages payable to all the employees in the scheduled employment, no minimum rates of wages shall be fixed or revised in respect of that employment during the said period." Sub-clause (2A) of Section 3 of the Minimum Wages Act clearly overrides Sections 12 and 25 of the said Act. The extent to which it is to be given overriding effect must be gathered from perusing the language employed in that Section and the corresponding terms employed, and their effect in the relevant provisions of the Industrial Disputes Act. It is significant that in this sub-clause (2-A) wherever the award of the Tribunal is referred to it is referred to as award which is in "operation". It is significant that in this sub-clause (2-A) wherever the award of the Tribunal is referred to it is referred to as award which is in "operation". The term binding is not the term employed though that term is employed in Section 19(6) of the Industrial Disputes Act which deals with a period after expiry of the period of operation of the award. Learned counsel for the petitioner-employer submitted that having regard to the decisions of the Apex Court and the clear language found in sub-clause (6) of Section 19 of the Industrial Disputes Act read along with Section 29 of that Act, the term "operation" used in sub-section (2A) of Section 3 of the Minimum Wages Act, should be construed as taking within its ambit the period during which the award continues to bind the parties even though the period of operation referred to in sub-section (3) of Section 19 of the Industrial Disputes Act might have come to an end. Our attention was invited to sub-section (6) of Section 19 of the Industrial Disputes Act which reads as under : "Section 19. (6) Notwithstanding the expiry of the period of operation under sub-section (3), the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award." The submission was that the intendment of the Industrial Disputes Act is that even after the expiry of the period of one year, and in case of extension the extended period under Section 19(3) the award would bind the parties and it would be incongruous to have an inconsistent instrument operate on the same persons during that period namely the award made under the Industrial Disputes Act and the notification issued under Section 5 of the Minimum Wages Act. Counsel places strong reliance on the decision of the Supreme Court in the case of Life Insurance Corporation of India v. D. J. Bahadur, 1981-I-LLJ-1 wherein it was held that the Industrial Disputes Act is a special law vis-a-vis the LIC Act. Counsel places strong reliance on the decision of the Supreme Court in the case of Life Insurance Corporation of India v. D. J. Bahadur, 1981-I-LLJ-1 wherein it was held that the Industrial Disputes Act is a special law vis-a-vis the LIC Act. The Court also emphasised the fact that an award, even after the expiry of the period of operation, would continue to bind the parties, and that, that binding character would continue even after a notice of termination is given by one of the parties till it is replaced by another settlement or award. In that decision, the Supreme Court did not hold that the effect of Section 19(3) and that of Section 19(6) of the Industrial Disputes Act is identical. The qualitative distinction between the two was referred to extensively in paragraph 44 of that judgment where the Court observed that : "Once the earlier contract is extinguished and fresh conditions of service are created by the award or the settlement, the inevitable consequence is that even though the period of operation and the span of binding force expire, on the notice to terminate the contract being given, the said contract continues to govern the relations between the parties until a new agreement by way of settlement or statutory contract by the force of an award takes its place." Under the provisions of the Industrial Disputes Act when the industrial dispute is resolved by adjudication and an award is made, the award after it is duly notified remains in "operation" as provided in Section 19(3) of the Industrial Disputes Act for a period of one year, which period is capable of being extended for a period not exceeding one year at a time but in all for a period not exceeding three years from the date on which the award came into operation, during that period, the parties to the award will be subject to the discipline of Section 23 of the Industrial Disputes Act which prohibits strikes and lock-outs. The relevant part of Section 23 of the Industrial Disputes Act reads thus : "23. General prohibition of strikes and lock-outs.- No workman who is employed in any industrial establishment shall go on strike in breach of contract and no employer of any such workman shall declare a lock out ... The relevant part of Section 23 of the Industrial Disputes Act reads thus : "23. General prohibition of strikes and lock-outs.- No workman who is employed in any industrial establishment shall go on strike in breach of contract and no employer of any such workman shall declare a lock out ... (c) during any period in which a settlement or award is in operation in respect of any of the matters covered by the settlement or award." The prohibition imposed by Section 23 will only be operative during the period in which the settlement or award is in operation. Section 23 will not apply during the period when that award is not in operation but is binding under Section 19(6) the penal provision for breach of a binding settlement or award is that provided in Section 29 of the Act which refers to, "........ breach of any term of any settlement or award, which is binding on him under this Act. ...." The word used in Section 19(6) as also in Section 29 is" binding". The Apex Court has at no time held that by reason of the award being" binding" Section 23(c) would be attracted even after the award has ceased to be in "operation". There is thus a clear distinction between the awards which are in "operation" and awards which are only "binding", but not in operation. The award has further lease of life after it ceases to be in operation, and after it ceases to be binding for the purposes of Section 19(6). Even after the notice to terminate the award is given by one of the parties the award continues to govern the parties until a new agreement by way of a settlement or a statutory contract by the force of an award takes its place. Thus, an award made under the Industrial Disputes Act may first be in "operation"; thereafter be "binding"; and still later continue to remain in force till replaced by a settlement of an award. The language employed in sub-section (2-A) of Section 3 of the Minimum Wages Act takes into account only the period during which the award is in "operation". Thus, an award made under the Industrial Disputes Act may first be in "operation"; thereafter be "binding"; and still later continue to remain in force till replaced by a settlement of an award. The language employed in sub-section (2-A) of Section 3 of the Minimum Wages Act takes into account only the period during which the award is in "operation". It does not take into account the period during which the award may bind the parties after it has ceased to be in operation, as also the period during which the award is in force despite a notice of termination having been given by one of the parties thereto. Once the award ceases to be in "operation", the notification issued under Section 5 of the Minimum Wages Act would clearly operate and by Section 12 of that Act everyone is bound to comply with the terms thereof. Neither the workman nor the employer is free to contract out of the reach of the Minimum Wages Act in view of Section 25 of that Act. Learned counsel for the petitioner also referred to the decision of the Apex Court in the case of Management of Karnataka State Road Transport Corporation v. KSRTC Staff and Workers Federation, 1999-I-LLJ-849. It was therein held that unilateral notice terminating the settlement would be ineffective, and that the settlement would continue to bind as a contractual obligation till a new settlement laying down fresh terms is entered into. Counsel also vehemently contended that the Industrial Disputes Act is a special law vis-a-vis the Minimum Wages Act as the object of the Industrial Disputes Act is to resolve industrial disputes and the resolution reflected in the award of the adjudicator should not be set at naught by any notification issued under the Minimum Wages Act. This submission cannot be accepted. The object of the Minimum Wages Act is to prescribe the statutory minimum rate at which the persons employed in the sector enumerated in the schedule to the Act are to be paid. The object of the Industrial Disputes Act is not the prescription of the minimum wage, it is the resolution of the disputes which disputes can also relate to wages. The object of the Industrial Disputes Act is not the prescription of the minimum wage, it is the resolution of the disputes which disputes can also relate to wages. The notification issued under the Minimum Wages Act has a statutory force which, the award made under the Industrial Disputes Act does not have, though the award binds the parties thereto for the proposal referred to in the provisions of the Industrial Disputes Act. The special law in relation to minimum wages is not the Industrial Disputes Act, 1947, but the Minimum Wages Act, 1948, in so far as the minimum wages are concerned. The minimum wages fixed under this Act would bind not only the employers and employees but would also bind the adjudicating forum under the Industrial Disputes Act, as the adjudication therein cannot ignore or fix wages contrary to the minimum wages prescribed under the Minimum Wages Act except in cases covered by sub-section (2-A) of Section 3. Moreover, the Minimum Wages Act is a welfare legislation. It is meant to protect all the employees in the scheduled industry and prevent their exploitation by all employees. That object will be achieved only if the notification issued under the Minimum Wages Act is made binding on all employers responsible for the payment of the wages. The Minimum Wages Act provides for consultation with all interested parties employers, employees, and Government before a notification fixing minimum wage is issued under Section 5 of the Act. The award on which the petitioner relies ceased to be in operation even prior to the issuance of the notification under the Minimum Wages Act. The petitioner is clearly bound by the terms of that notification and cannot assert a right to pay a lesser rate by relying upon an award which is not in operation. We do not find any merit in these writ petitions and the same are dismissed.