Shri B. P. Hira, Works Manager, Central Railway vs Shri C. M. Pradhan etc

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: 131 of 1957

Decision Date: 8 May 1959

Coram: P. B. Gajendragadkar, Bhuvneshwar P. Sinha, K. N. Wanchoo

In this matter the Supreme Court of India heard an appeal filed by Shri B P Hira, who was the Works Manager of Central Railway at Parel, Bombay, against Shri C M Pradhan and others. The judgment was delivered on 8 May 1959. The case was decided by a bench consisting of Justice P B Gajendragadkar, Justice Bhuvneshwar P Sinha and Justice K N Wanchoo. The citation for the decision is reported in 1959 AIR 1226 and 1960 SCR (1) 137.

The dispute concerned claims for overtime wages by employees who worked as time‑keepers in the time office of the Central Railway Workshop and Factory at Parel, Bombay. The claimants sought payment under the Payment of Wages Act, 1936. They argued that they qualified as “workers” within the meaning of Section 2(1) of the Factories Act, 1948, and therefore were entitled to overtime wages under Section 59 of that Act. Alternatively, they contended that even if they were not “workers” under Section 2(1), they were nevertheless entitled to overtime wages because Section 70 of the Bombay Shops and Establishments Act, 1948 made the relevant provisions of the Factories Act applicable to them. The appellant, representing the railway, disputed the validity of the claim on both grounds.

The Authority under the Payment of Wages Act examined the applications and found that only four of the respondents, who performed the duties of progress time‑keepers, could be regarded as “workers” under Section 2(1) of the Factories Act. The remaining respondents were classified merely as employees of the workshop. Nevertheless, the Authority accepted the claimants’ alternative argument based on Section 70 of the Bombay Shops and Establishments Act. Consequently, it directed the appellant to file a statement showing the overtime wages due to each respondent and ordered payment of those amounts.

The Supreme Court held that the Authority’s decision was correct because it properly relied on Section 70 of the Bombay Shops and Establishments Act, 1948. On a careful construction of that provision, the Court observed that the first part of Section 70 excludes a factory and its employees from the operation of the Shops and Establishments Act, while the second part expressly makes the relevant provisions of the Factories Act applicable to the factory and its employees. The non‑obstante clause in Section 70 confirms that employees in a factory, even if they do not fall within the definition of “worker” in Section 2(1) of the Factories Act, are nevertheless entitled to claim overtime wages as provided by that Act. The Court further clarified that Section 4 of the Bombay Shops and Establishments Act does not have the effect of negating or excluding the operation of Section 70. Accordingly, the Court affirmed the Authority’s order directing the appellant to determine and pay the overtime wages claimed by the respondents.

Section 4 of the Bombay Shops and Establishments Act applies only to establishments and does not extend to factories. Even assuming, arguendo, that Section 4 were to apply to factories, such application would not materially affect the operation of Section 70, which is intended to operate notwithstanding any other provision of the Act. Consistent with the policy of the legislation, the Act provides for overtime wages to employees in all establishments and, by incorporating the relevant provisions of the Factories Act, it similarly provides for overtime wages to employees in factories. The judgment concerned civil appeals numbered 131 to 304 of 1957, which were taken by special leave from judgments and orders dated 19 October 1955 and 31 January 1956 of the Payment of Wages Authority, Bombay, in the series of applications numbered 950‑961, 963‑967, 970‑989, 992, 994‑1013, 1015‑1016, 1049‑1050, 11510‑11511 and 11513‑11517 of 1955. Counsel for the appellants included the Attorney‑General for India and two senior advocates, while counsel for the respondents appeared in all the appeals except one. The judgment was delivered on 8 May 1959 by Justice Gajendragadkar. This group of one hundred and seventy‑four appeals arose from multiple applications filed by employees of the Central Railway Workshop and Factory, Parel, Bombay against the works manager, Mr B P Hira, who is herein referred to as the appellant. The employees, hereinafter called the respondents, sought payment of overtime wages under the Payment of Wages Act, 1936, alleging that such wages were due from 1948 onward. All of these applications were heard together by the Payment of Wages Authority, Bombay, as companion matters and were disposed of by a single common judgment. The principal judgment, however, was rendered in the application filed by Mr C M Pradhan, identified as the respondent, which gave rise to Civil Appeal No. 131 of 1957 before this Court. The present decision therefore addresses that specific appeal, and the Court’s ruling on it is intended to govern the remaining appeals in the same group.

In the application presented before the Payment of Wages Authority, the respondent contended that he had been employed at the Central Railway Workshop and Factory, Parel, Bombay, and that he had not received overtime wages for the period from 1 April 1949 to 30 September 1954. He urged that the delay in filing the present application ought to be condoned because, together with his co‑workers, he had maintained correspondence with the railway administration concerning the overtime claim since 1948, and that the railway administration had finally rejected the claim on 31 August 1954. The respondent argued that he filed the present application shortly after that rejection, and therefore the delay in approaching the Authority should be excused. The Authority examined the parties on the issue of delay and concluded that the delay pertained only to the claim for the period after May 1953. Consequently, the Authority rejected the claim for overtime wages for the period prior to 19 May 1953 on the preliminary ground of delay, while the claim for the period subsequent to that date was to be considered on its merits. The respondent further maintained that he was entitled to overtime wages for work performed on Sundays when he was not granted a holiday within three days before or after such Sundays, a contention to which the appellant conceded. The respondent also asserted that he qualified as a “worker” within the meaning of Section 2(1) of the Factories Act, 1948, and therefore was entitled to overtime wages under Section 59 of that Act, or alternatively sought relief on other statutory grounds.

In this matter the Authority held that the delay concerning the claim for overtime wages for the period after May 19 1953 should be condoned, whereas the claim for the period before that date was rejected on the preliminary ground of delay and the later claim was examined on its merits. The respondent contended that he was entitled to overtime wages for work performed on Sundays when he had not received a holiday either within the three days preceding or within the three days following those Sundays. The appellant conceded that the respondent had indeed not been granted a holiday within the three‑day period before or after the Sundays on which he worked, a requirement prescribed by section 52 of the Indian Factories Act.

The respondent further asserted that he qualified as a “worker” within the meaning of section 2, sub‑section (1) of the Factories Act (Act LXIII of 1948) and, consequently, was entitled to overtime wages under section 59 of that Act. Alternatively, he argued that even if he were not a “worker” under section 2(1), he would still be eligible for overtime wages under section 59 by virtue of section 70 of the Bombay Shops and Establishments Act, 1948 (Bombay Act 79 of 1948), hereinafter referred to as “the Act.” Thus, the respondent’s claim rested on two alternative legal bases.

The appellant challenged the validity of the respondent’s claim. It was submitted on behalf of the appellant that the respondent was not a “worker” as defined by section 2(1) of the Factories Act and that section 70 of the Bombay Shops and Establishments Act did not furnish a justification for the alternative claim for overtime wages.

The Authority examined the evidence presented concerning all respondents who sought overtime wages. The records indicated that these respondents were employed by the appellant in the time‑office of the Parel Workshop rather than directly in the factory. Their duties as time‑keepers involved maintaining initial attendance records of workshop staff, preparing pay‑sheets for the staff, managing leave accounts, handling final settlement cases of the staff, and preserving statistical information. The Authority concluded that the time‑office formed an integral part of the factory and therefore held that the time‑keepers were employed in the Central Railway Workshop and Factory at Parel, Bombay.

Subsequently, the Authority addressed whether the time‑keepers qualified as “workers” under section 2(1) of the Factories Act. Evidence revealed that four time‑keepers performed the functions of progress time‑keepers. Their work consisted of preparing progress time‑sheets and operation time‑sheets for machine‑shop staff engaged in various tasks related to the production of railway spare parts. Considering the nature of the duties assigned to the progress time‑keepers, the Authority was inclined to view that, given the characteristics of their work, the progress time‑keepers should be regarded as “workers” within the meaning of section 2(1) of the Factories Act.

The Authority concluded that persons who perform work incidental to or connected with the manufacturing process, or with the subject of the manufacturing process, fall within the meaning of “worker” under section 2(1) of the Factories Act. Accordingly, the Authority held that while the time‑keepers were employees of the workshop, they could not be classified as workers under the Act, whereas the progress time‑keepers could claim the status of workers under the same provision. The Authority then examined the respondent’s contention that, even if he were not a worker within the meaning of the Act, he could nonetheless seek the benefit of section 59 by virtue of section 70. The Authority accepted this argument and ruled that section 70 entitled a person who is not a worker under section 2(1) to claim overtime wages under section 59. Consequently, the Authority ordered that the respondents were entitled, for the period from 19 May 1953 to 30 September 1954, to overtime wages at double the ordinary rate for any Sundays on which they worked without having been granted a holiday on one of the three days immediately preceding or following that Sunday. The appellant was directed to file a statement showing the overtime wages due to each respondent, and orders were issued directing the appellant to pay the respective amounts to each of the respondents. The present group of appeals by special leave was filed against those orders.

The first point raised on behalf of the appellant, through the learned Attorney‑General, was that the Authority erred in holding that the progress time‑keepers qualified as workers under section 2(1) of the Factories Act. A “worker” under section 2(1) is defined as a person employed directly or through any agency, whether for wages or not, in any manufacturing process, in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to or connected with the manufacturing process, or the subject of the manufacturing process. Section 2(k) defines “manufacturing process” to include, inter alia, making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking‑up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal. The Authority acknowledged that the duties of the progress time‑keepers did not fall within the first part of the definition in section 2(k). Nevertheless, the Authority held that those duties could be treated as incidental to or connected with the manufacturing process or its subject, and it was this finding that the appellant challenged. On the other side, counsel for the respondents argued that the Authority was also in error in holding that the ordinary time‑keepers were not workers under section 2(1).

In this matter the appellant argued that the term “incidental to, or connected with, the manufacturing process” should be interpreted broadly enough to encompass not only the specific circumstances of the progress time‑keepers but also every individual who performed the function of a time‑keeper as a class. The authority had previously concluded that the time‑keepers were not workers within the meaning of section 2(1) of the Factories Act, a finding that was contrary to the position of the respondents. Nevertheless, counsel for the respondents maintained that the final order issued by the authority could be supported on an additional basis: that the time‑keepers, like the progress time‑keepers, qualified as workers under section 2(1) and therefore possessed the right to claim overtime remuneration pursuant to section 59 of the Factories Act. The authority’s ultimate decision, however, rested on a different premise. It held that, under section 70 of the Act, the respondents would be entitled to overtime wages covered by section 59 even if they did not fall within the definition of a worker under section 2(1). Consequently, the Court considered it essential first to examine whether the authority’s interpretation of section 70 was correct. If that interpretation proved sound, the question of whether the time‑keepers and progress time‑keepers were workers under section 2(1) would become unnecessary, and the Court therefore addressed the scope and effect of section 70 before revisiting the classification issue.

The Court noted that three distinct statutes provided for the payment of extra wages for overtime work. The first was the proviso to section 71(c) of the Indian Railways Act (IX of 1890), which stipulated that any exempted railway servant identified therein must receive overtime pay at a rate not less than one and one‑quarter times the ordinary rate of pay. Although this provision had later been amended by Act 59 of 1956 to increase the overtime rate to one and one‑half times the ordinary rate, the parties agreed that the amendment was irrelevant to the present appeals because the respondents’ claim related to a period preceding the amendment. The appellant suggested that the respondents were railway servants under section 3(7) of the same Act and therefore might be able to claim overtime under the proviso; however, the respondents had neither made such a claim nor wished to pursue it, rendering the question of the provision’s applicability moot. The Court further observed that, assuming the authority’s construction of section 70 was correct, the claims of employees working in a factory located in the State of Bombay would be governed by that provision, a position that was not seriously contested. Finally, the Court referred to section 59 of the Factories Act, which mandates payment of overtime wages at twice the ordinary rate, and indicated that this statutory provision formed part of the broader legal framework under consideration.

In the present dispute the Court observed that the Factories Act provided, under section 59, a right to overtime wages at twice the ordinary rate, but this benefit was limited to persons who qualified as “workers” within the meaning of section 2(1) of that Act. Since the respondents were held not to be workers under that definition, the Court concluded that section 59 could not, by itself, apply to them. The Court then turned to the Bombay Shops and Establishments Act of 1948, which constituted a third piece of legislation dealing with overtime remuneration. Section 63 of that Act governed overtime pay, prescribing a rate of one‑and‑a‑half times the ordinary wage for employees in establishments other than residential hotels, restaurants, or eating‑houses, while subsection (2) fixed the rate at twice the ordinary wage for employees in those specific kinds of establishments, subject to further conditions. The Court found that this provision did not extend to the respondents because they were employed in a factory and therefore fell outside the categories enumerated in either subsection of section 63. The respondents, however, contended that section 70 of the Factories Act extended the provisions of the Factories Act, including section 59, to all employees working in factories, thereby giving them a claim to overtime wages under that section. The Authority had upheld this contention, and the appellant did not dispute that the Bombay Legislature possessed the competence to extend the Factories Act’s provisions to factory employees within the State of Bombay. Moreover, the legislation had received the necessary sanction from the Governor‑General of India on 3 January 1949, eliminating any question of repugnancy between section 70 and the Factories Act. Consequently, the Court held that the validity of section 70 was not in dispute and that the sole issue remaining for determination was a question of construction: whether section 70 supplemented the Factories Act by extending its provisions to all factory employees, even those who were not “workers” under section 2(1).

Before addressing that construction question, the Court briefly outlined the broader features of the Bombay Shops and Establishments Act. The Act was described as a benevolent piece of social legislation aimed at promoting labour welfare, enacted to consolidate and amend the law relating to regulation, conditions of work, and employment in shops, commercial establishments, residential hotels, restaurants, eating‑houses, theatres, other places of public amusement and entertainment, and any other establishments the State Government might declare by notification in the official Gazette. Section 2, in its subsections (3), (4), and (27), defined “establishment,” “commercial establishment,” and “shop,” respectively, expressly excluding factories from these definitions. The Court noted that the definition of “establishment” was intentionally broad and not exhaustive, allowing the State Government to include additional types of establishments by Gazette notification. Furthermore, section 2, subsection (6), defined “employee” as any person wholly or principally employed in connection with any establishment, including apprentices but excluding members of the employer’s family. This definition indicated that the Act intended to confer its benefits on all persons falling within the expansive concept of “employee.” The Court therefore recognized that the Act’s purpose was to extend protections to a wide class of workers, subject to the specific limitations articulated in its various provisions.

In this case, the judgment noted that the term “establishment” under the Act was defined to include a shop, a commercial establishment, a residential hotel, a restaurant, an eating‑house, a theatre or any other place of public amusement to which the Act applied, and that the definition also permitted the State Government to declare additional establishments as such by publishing a notification in the official gazette. An example of this was the notice published in the Bombay Government Gazette, Part IV, dated 11‑1‑1949, which brought a particular place within the meaning of “establishment” for the purposes of the Act. The judgment observed that the definition of establishment was deliberately wide and was not intended to be exhaustive, because it expressly empowered the State Government to bring other kinds of premises within its scope by means of a gazette notification. Section 2, sub‑section (6) of the Act defined “employee” as a person who was wholly or principally employed in, and in connection with, any establishment; the definition also included apprentices but excluded members of the employer’s family. This definition demonstrated the legislative intent to extend the benefits of the Act to all individuals who fell within the broad expression “employee.” The judgment then turned to the definition of “factory” as provided in the Act. Section 2(9) defined a factory as any premises that qualified as a factory under clause (m) of section 2 of the Factories Act or that were deemed to be a factory under section 85 of the Factories Act. Clause (m) of section 2 of the Factories Act described a factory as any premises, including its precincts, where either (i) ten or more workers had been employed on any day during the preceding twelve months and a manufacturing process was carried on with the aid of power, or (ii) twenty or more workers had been employed on any day during the preceding twelve months and a manufacturing process was carried on without the aid of power; the definition expressly excluded a mine governed by the Mines Act, 1952, and a railway running shed. Section 85 gave the State Government authority to extend the definition of factory to other places that met the criteria laid down in that section. It was accepted as common ground that the place where the respondents worked satisfied the definition of a factory under clause (m) of section 2 of the Factories Act and therefore fell within the meaning of section 2(9) of the Act. The judgment further explained that the structure of the Act dealt separately with shops and commercial establishments (Chapter III), residential hotels, restaurants and eating‑houses (Chapter IV), and theatres and other places of public amusement (Chapter V), providing distinct provisions tailored to the special needs of each category. Nevertheless, the Act also contained general provisions applicable to all such establishments, which were set out in Chapters VI to IX, and it was significant that, apart from section 70, no other provision of the Act addressed factories.

In this case, the Court observed that, apart from section 70, no other provision of the Factories Act dealt with factories. It noted that the Act expressly excluded factories when it defined the terms “commercial establishment” and “shop.” Although the definition of “establishment” was broad and did not specifically exclude a factory, the Court explained that the Act treated a factory as a separate and distinct category; consequently, the provisions that applied to establishments were not intended to apply to factories. In other words, even though the term “establishment” could, in theory, include a factory, the legislative intent was that it should not do so for the purposes of the Act. The Court conceded that a kitchen attached to a residential hotel might satisfy the technical definition of a factory, but it held that such an annex was prima facie not meant to be regarded as a separate entity from the main establishment. Therefore, that kitchen would be considered part of the establishment and would be governed by the provisions applicable to establishments. By contrast, the factory where the respondents were employed was not connected with, let alone an inseparable adjunct of, any other establishment. The Court therefore stated that the theoretical issue raised by the learned Attorney‑General about the relationship between factories and establishments needed no further examination in the present appeal. The appellant had contested the Authority’s conclusion on the ground that section 70 could not be invoked against the respondents. To support this contention, reliance was placed on section 4 of the Act, which provides that, notwithstanding anything else in the Act, the provisions listed in the third column of Schedule 11 would not apply to the establishments, employees and other persons named in the second column of that schedule. The proviso to section 4 authorised the State Government to add, omit or modify any of the entries in the schedule. It was argued that a railway administration was listed as entry number 5 in Schedule II and that the entry in column 3 indicated that the provisions of the Act were inapplicable to that establishment. Accordingly, the Attorney‑General asked how section 70 could be said to apply to an establishment that was exempted from all provisions of the Act. The Court clarified that section 4 dealt exclusively with establishments and had no application to factories, and that the matter before the Court concerned employees working in a factory. As the Court had already observed that, apart from section 70, no provision of the Act applied to factories, it concluded that it would be improper to argue that section 4 was relevant to the present case.

The Attorney‑General hinted, albeit weakly, that the establishments listed at serial numbers one through six in column two of schedule II might be broader in scope and different in nature from the establishment defined in subsection two eight of the Act. The Court found this suggestion unsubstantiated. It held that there can be no doubt that subsection four confers exemptions on those establishments from the provisions recorded in column three of schedule II, and that such exemption presupposes that, but for the exemption, the provisions of the Act would have applied to them.

The Court observed that the arrangement of schedule II demonstrates a clear distinction. For the establishments and offices enumerated at serial numbers one to six, including the sub‑entries six (a) to six (k), all provisions of the Act are rendered inapplicable. In contrast, for the entries listed at serial numbers seven to fifty‑five, only the particular provisions specified in column three are excluded, implying that the remaining sections of the Act continue to apply. Consequently, those entities must be regarded as establishments within the meaning of subsection two eight of the Act. The Court further noted that subsection two eight empowers the State Government, by notification, to bring any office or institution within the definition of establishment. Therefore, the inclusion of any such office or institution in column two of schedule II automatically classifies it as an establishment under the Act, subject to the corresponding exemption indicated in column three. For this reason, the Court could not accept the Attorney‑General’s view concerning the meaning and character of the establishments listed at serial numbers one to five in column two of schedule II. All offices, establishments and other institutions mentioned in column two of schedule II are, and must be, treated as establishments under subsection two eight.

Addressing the argument that the operation of subsection four excludes the application of subsection seventy, the Court reiterated that subsection four applies solely to establishments and not to factories. Even assuming, for argument’s sake, that subsection four were to apply to factories, the Court did not think this would materially affect the operation of subsection seventy. The plain purpose of subsection seventy, together with its contextual placement, makes clear that it is intended to function independently of the other provisions of the Act and to stand apart from them. This intention is expressly set out by the Legislature in subsection seventy, which declares that nothing in the Act shall be deemed to apply to any persons employed in a factory. The Court therefore cited the provision and proceeded to interpret it. Section 70 provides that nothing in this Act shall be deemed to apply to any person employed in or within the precincts of a factory and the provisions of the Factories Act shall, notwithstanding anything in the

The Court observed that Section 70 of the Act is divided into two distinct parts. The first part unequivocally declares that no provision of the Act shall be deemed applicable to the persons named in that clause, and the Legislature was aware that the Act contained no express provision that applied to such persons; nevertheless, to eliminate any possible doubt, it expressly provided that no provision of the Act, whether by direct reference, implication or legal fiction, shall be deemed to apply to them. In other words, this clause clarifies that although the term “factory” is defined by Section 2(9) of the Act, the Legislature did not intend any provision of the Act to be applied to a factory or to the employees working therein. Having settled that position, the second part of Section 70 extends the operation of the Factories Act to those persons. The Legislature could have listed every relevant provision of the Factories Act and made each of them applicable to factories as defined by Section 2(9), but it chose instead to achieve the same result by enacting the second part of Section 70. That part expressly states that the provisions of the Factories Act shall apply to the persons in question notwithstanding anything contained in the said Act. The Act defines “workers” under Section 2(1), and consequently the provision concerning payment of overtime wages applies only to workers as defined, leaving employees in factories who are not classified as workers outside its scope. Section 70 therefore provides that, notwithstanding the definition in the Act, the relevant provisions of the Factories Act will apply to persons employed in a factory. The non‑obstante clause in Section 70 thus serves to clarify that the Factories Act is made applicable to employees in factories and that those employees are not governed by any of the provisions of the Act. This interpretation is consistent with the overall policy of the legislation, which provides for payment of overtime wages to employees in all establishments under Section 63 and simultaneously makes the appropriate provisions of the Factories Act applicable to employees in factories. The Authority adopted this view, and the Court found that the Authority’s interpretation is valid and unquestionable. Accordingly, the orders issued by the Authority were confirmed, and the appeals were dismissed with costs, the dismissal being recorded in a single set.