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 short question which arises in this appeal is whether the term wages as defined by section 2vi of the 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 by section 2vi before it was amended in 1958
The subsequent amendment expressly provides by section 2vi 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 section 2vi
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 22 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 only As
 10  per day and that led to the present claim made by the respondents under section 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 that section 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 section 2vi and it also argue that the claim of the respondents was barred by limitation
421 The authority has found that section 2vi includes wages prescribed by the Industrial Tribunal and so it has rejected the appellants  contention that the applications made by the respondents were incompetent under section 15 of the Act
In regard to the question of limitation the authority did not decide the said question as a preliminary question because it held and in our opinion rightly that it was a mixed question of fact and law and so it had to be tried after recording evidence
The appellant challenged the correctness of the conclusion of the authority that the applications made by the res pondents were competent under section 15 of the Act before the Patna High Court by filing a petition under article 226 of the Constitution
The High Court has affirmed the finding of the authority and held that section 15 was applicable to the case because the wages prescribed by the award did amount to wages as defined by section 2vi 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 2vi 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 section 2vi 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 Tribunal cannot be said to amount to a contract of employment the wage structure prescribed by the award cannot fall within the definition prescribed by section 2vi
That in brief is the substance 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 by an award could not be included
In dealing with the question of construing the unamended definition of the term wages it is essential to bear in mind the scope and character of the powers conferred on Industrial Tribunals when they deal with industrial disputes under the provisions of the Indus trial Disputes Act
It is now well settled that unlike ordinary civil courts which are bound by the terms of contract between the parties when they deal with disputes arising between them in respect of the said terms Industrial adjudication is not bound to uphold the terms of contract between the employer and the employees
If it is shown to the satisfaction of Industrial adjudication that the terms of contract of employment 422 for instance need to be revised in the interests of social justice it is at liberty to consider the matter take into account all relevant factors and if a change or revision of the terms appears to be justified it can and often enough it does radically change the terms of the contract of employment
The development of industrial law during the last decade bears testimony to the fact that on references made under section 101 of the Industrial Disputes Act terms of employment have constantly been examined by industrial adjudication and wherever it 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 section 2vi cannot take in the wages prescribed by the award 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 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 wages prescribed by the award cannot be treated as wages under section 2vi 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 connectionwe may incidentally refer to the decision of this Court in the South Indian Bank Ltd vs A R Chacko1 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 new 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 Jogendra Nath 1 AIR 1964 SC 15
423 Chatterjee and Sons vs Chandreswar Singh1 the Calcutta High Court appears to have taken the view which supports Mr Setalvad s argument whereas in the Modern Mills Ltd vs V R Mangalvedhkar2 and in V B Godse Manager Prabha Mills Ltd vs R M Naick Inspector under the Payment of Wages Act3 the Bombay High Court has interpreted section 2vi to include wages directed to be paid by industrial adjudication
In our opinion the Bombay view correctly represents the true legal position in the matter
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
Appeal dismissed 1 AIR 1951 Cal 29
2 AIR 1930 Bom


Summary:
In pursuance of an award made by an Industrial Tribunal fixing the pay of the employees at Rs 22 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 section 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 section 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 section 2vi 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 article 226 of the Constitution
The High Court dismissed the writ petition and affirmed the finding of the authority
It held that section 15 was applicable to the case because the wages prescribed by the award did amount to wages as defined by section 2vi 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 section 2vi 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 difficult to hold that the wages prescribed by the award cannot be treated as wages under section 2vi of the Act before it was amended
The amendment has merely clarified what was included in the unamended definition itself
South Indian Bank Ltd vs A R Chacko AIR 1964 SC 1522 referred to
Jogindra Nath Chatterjee and Sons V Chandreswar Singh AIR  inapplicable
Modern Mills Ltd vs V R Mangalvedhikar AIR 1950 Bom
342 and V B Godse Manager Prabha Mills Ltd vs R M Naick  approved LPDlSCI 14a 420