IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 30.11.2011 CORAM THE HONOURABLE MR. JUSTICE ELIPE DHARMA RAO and THE HONOURABLE MR. JUSTICE R.SUBBIAH Writ Petition Nos.609, 1276, 1466, 1980 to 1982, 9076 and 21035 of 2011 and Connected M.Ps. 1.Heavy Vehicles Factory Employees' Union rep. By its General Secretary Mr.J.Muralitharan, Babuji Circle, HVF Estate, Avadi Camp, PO Chennai-600 054. 2.E.Damodaran ... Petitioners in W.P.609/2011 1. Engine Factory Avadi Emeployees Union Rep. by General Secretary V.Mohan, No.20A Pillaiyar Koil Street, Kavaraipalayam, Avadi, Chennai. 2. P.S. Arulmozhi ..Petitioner in W.P.1276/2011 1. Ordnance Clothing Factory, Worker's Union Rep. by its General Secretary C. Srikumar, S.M. Banarjee Maliagi, OCF Road, Avadi, Chennai 600 054. 2. N.R. Moorthy .. Petitioners in W.P.1466/2011 1. Employees Union, CQA (HV) Rep. by its General Secretary G. Raju, Office Superintendent No.89, Subramaniyam Nagar, Thirumullaivoyal, Chennai. 2. S. Vasudevan, FGM(HS) .. Petitioners in W.P.1980/2011 https://hcservices.ecourts.gov.in/hcservices/ 1. CQA (AVL) Employees Union, Rep.by its General Secretary, A. Raghavan Kutty, Plot No.203, Thirumnalaivasan Nagar, 13th street, S.M. Nagar Post, Avadi, Chennai-62. 2. P.Subash ..petitioner in W.P.1981/2011 1. QAE (A) Employees Union, Rep by its Vice President G. Seeman, Examiner No.18, Varalakshmi Nagar, Ondikuppam, Tiruvallur. 2. M. Pachaiyappan ..Petitioners in W.P.1982/2011 1. Heavy Vehicles Factory, Mazoor Sangh, General Secretary, No.55, Rangasayee Street, Perambur, Chennai. 2. N.Radhakrishnan ..Petitioners in W.P.9076/2011 1. Defence Factory Labour Union, by its General Secretary, R. Venkatesh Row, Cordite Factory, Aravankadu 643 202 Nilgiris District. 2. N. Ravi Chandran ..Petitioner in W.P.21035/2011 vs Union of India Rep. by its Secretary to Government, Ministry of Defence, Department of Defence Production, South Block, New Delhi 110 001. .. 1st Respondent in W.P.609,1276, 1466, 1980, 1981, 1982, 21035/2011 1. The Management, Heavy Vehicle Factory, Avadi, Chennai. ..1 st Respondent in W.P.9076/2011 https://hcservices.ecourts.gov.in/hcservices/ 2. The Chairman, Ordnance Factory Board, No.10-A, S.K. Bose Road, Kolkatta -700 001. ..2nd Respondent in W.P.609, 1276, 1466/2011 2. The Director General of Quality Assurance, Ministry of Defence, Department of Defence Production, South Block, New Delhi 110 001. ..2nd Respondent in W.P.1980, 1981, 1982, 21035/2011 2. The under Secretary, Ministry of Defence, Sena Bhavan, New Delhi. ..2nd Respondent in W.P.9076/2011 3 THE SENIOR GENERAL MANAGER HEAVY VEHICLES FACTORY, AVADI, CHENNAI-54. ..3rd Respondent in WP 609/2011 3 THE GENERAL MANAGER ENGINE FACTORY AVADI CHENNAI-54. ..3rd Respondent in WP 1276/2011 3 THE GENERAL MANAGER ORDNANCE CLOTHING FACTORY AVADI CHENNAI-54. ..3rd Respondent in WP 1466/2011 3 THE CONTROLLER CONTROLLERATE OF QUALITY ASSURANCE (HEAVY VEHICLES) AVADI CHENNAI. ..3rd Respondent in WP 1980, 1981, 1982/2011 3 THE GENERAL MANAGER CORDITE FACTORY ARAVANKADU, NILGIRIS DISTRICT. ..3rd Respondent in WP 21035/2011 https://hcservices.ecourts.gov.in/hcservices/ 4 THE PRINCIPAL CONTROLLER OF ACCOUNTS (FACTORIES) NO.10-A S.K.BOSE ROAD KOLKATTA-700001. ..4th Respondent in WP 609,1276, 1466, 21035/2011 4 THE CONTROLLER OF FINANCE & ACCOUNTS(FYS) C/O. HEAVY VEHICLES FACTORY AVADI CHENNAI. ..4TH Respondent in WP 1980, 1981, 1982/2011 5 THE REGISTRAR CENTRAL ADMINISTRATIVE TRIBUNAL CHENNAI BENCH, CHENNAI. ..5TH Respondent in WP 609,1276, 1466,1980,1981,1982 21035/2011 Prayer:- W.P.609, 1276, 1980, 1981, 1982/2011:- Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus, calling for the records of the 5th respondent in its order dated 24.12.2010 in O.A.No.1144, 1143, 1114, 1115, 1113 of 2009, quash the same and consequently direct the respondents to include House Rent Allowance, City Compensatory Allowance, Travelling Allowance etc. and all other allowances admissible in conformity with section 59 of the Factories Act, 1948 for the purpose of calculation of overtime allowances with a further direction to refund the amounts recovered from the petitioners. W.P.No.1466/2011, 21035/2011: Praying to issue a writ of Certiorarified Mandamus, to Call for the records in connection to the Office Memorandum No. F.No.14(1)/2000/ D(Civ-II) dated 26.06.2009 and the order of the 5th respondent dated 24.12.2010 passed in O.A.No.1132 of 2009 (W.P.1466/2011) O.A.No.631/2010 (W.P.21035/2011) and quash the same and consequently direct the respondents 1 to 4 herein to include House Rent Allowance City Compensatory Allowance Travelling Allowance and all other allowances admissible in conformity with the Sec.59 of the Factories Act 1948 for the purpose of calculation of Overtime allowance further direction to refund the amounts already recovered from the employees concerned W.P.No.9076 of 2011: Praying to issue a writ of Certiorarified Mandamus,Calling for the records vide order dated 24.12.2010 in O.A.No.1214 of 2009 on the file of the Central Administrative Tribunal Chennai Bench-I quash the same and consequently direct https://hcservices.ecourts.gov.in/hcservices/ the respondents to include House rent allowance City Compensatory Allowance Travelling Allowance etc and all other allowances admissible in conformity with section 59 of the Factories Act 1948 for the purpose of calculation of overtime allowance with a further direction to refund the amounts recovered from the petitioners. For Petitioner in : M/s.Karthik W.P.Nos.609, 1276 & 1980 to 1982/2011. For Petitioner : Mr.V.Parthiban for W.P.Nos.1466,21035/2011 M/s.Paul and Paul For Petitioner in : Mr.L.Chandrakumar for W.P.No.9076/2011 M/s.G. B. Saravanabhavan For Respondents in W.P.Nos.: Mr.R.Suresh Kumar, 609,1276,1466,9076 SPCCG for R-1 – R-4 & 21035/2011 R1 & R2 (W.P.9076/2011) For Respondents in : Mr.S.Haja Mohideen Gisthi, W.P.Nos.1980 to1982/2011 SPCCG for R1 to R-4 R-5 - Tribunal. C O M M O N O R D E R (Order of the Court was made by ELIPE DHARMA RAO,J.) As the issue involved in the all the writ petitions are one and the same, the following common order is passed. 2.The first petitioner in the above writ petitions are the registered and recognized Union/Association representing various categories of employees, who are working in the third respondent establishment and the second petitioner in the above writ petitions are the members of the said Union. 3.It is the case of the employees, who are working under the third respondent establishment, that they have all along been in receipt of overtime allowances whenever they are detained for duty beyond the normal working hours of 48 hours in a week, and the said allowance has been calculated and computed by including all allowances admissible to the employees like House Rent Allowance, City Compensatory Allowance, Transport Allowance, Small Family Allowance etc., as per the provisions of the Factories Act, 1948, since the third respondent factory is governed by the said Act. It is also the case of the employees that while so, the first respondent issued a memorandum, dated 26.06.2009 stating that House Rent Allowance, Travelling Allowance and Small Family Allowance would stand excluded for the purpose of computation of overtime allowance without assigning any reason therein for exclusion of the https://hcservices.ecourts.gov.in/hcservices/ same. Aggrieved by the said order, the employees and the Union/Association have filed original applications before the Central Administrative Tribunal. 4.The Tribunal, on consideration of the facts and circumstances of the case, dismissed the original applications, as per common order, dated 24.12.2010, by holding that when a specific clarification is make in provision 2 of Section 59, about the term "ordinary rate of wages", the applicants cannot contend that the allowances include HRA, TA and other allowances and there is no reason to hold that the term 'allowance' includes all allowances, viz., HRA, TA etc., which is not the intention of the legislature while incorporating the relevant provisions. Aggrieved by the said order, the Union/Association as well as the employees have filed the above writ petitions. 5. Heard the learned counsel for the petitioners and the learned counsel for the respondents 1 to 4. 6. The learned counsel for the petitioners contended that the Sub Section 2 of Section 59 excludes only two elements, viz., bonus and wages for overtime work and includes all other allowances for the purpose of calculating overtime wages and the Tribunal, without appreciating the aforesaid provision, dismissed the original applications, which is incorrect and unsustainable. 7.The learned counsel for the petitioners, in support of the aforesaid contention, have relied on the provisions of Sub Section 2 of Section 59 of the Factories Act, 1948, which states that "ordinary rate of wages means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of food grains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work". 8. The learned counsel for the petitioners also placed reliance on the decision of the Hon'ble Supreme Court reported in Govind Bapu Salvi and others -vs- Vishwanath Janardhan Joshi (1995 Supp(1) SCC 148), wherein the Hon'ble Supreme Court, while interpreting Section 59 of the Factories Act, held that, 'admittedly, the appellants are not entitled to the payment of the house rent allowance, since they are in occupation of the official quarters and hence, for calculating the overtime wages, the house rent allowance cannot be taken into account and what Section 59(2) contemplates is the eligibility to the payment of the house rent allowance and the service conditions envisage employees who are and who are not provided with the official accommodation and provide for house rent allowance only to those who are not provided with the accommodation https://hcservices.ecourts.gov.in/hcservices/ and the mere fact, therefore, that the service rules provide for house rent allowance when no accommodation is given, will not entitle the employees to succeed in their present claim". By placing reliance of the aforesaid judgment, the learned counsel for the petitioners 1 to 4 submitted that the service conditions envisage employees for payment of house rent allowance when they are not provided with the accommodation. 9. The learned counsel for the petitioners further relied on the proceedings of the Ministry of Railway, dated 20.05.2011, wherein it is stated that, "it has now been decided to revise the date of effect of OTA as 01.01.2006 and it is however clarified that the basic pay and DA element for the purpose of OTA shall be revised with effect from 01.01.2006 and other elements constituting emolument for the purpose of OTA, viz., HRA and Transport Allowance etc. shall be taken into account at revised rates with effect from 01.09.2008 as per the Sixth Central Pay Commission recommendations. 10.The learned counsel for the petitioners also relied on the judgment of the Hon'ble Supreme Court reported in Union of India -vs- Suresh C.Baskey [(1996) 1 Supreme Court Cases 701], wherein it has been held as follows:- "The overtime allowance has to be computed on the basis of the “ordinary rate of wages”. Sub-section (2) of Section 59 of the Act defines “ordinary rate of wages” to mean the basic wages plus such allowances as the worker is for the time being entitled to, but does not include the bonus and wages for overtime work. In other words, the ordinary rate of wages is the basic wages plus the allowances to which a worker is entitled for the time being. If a worker is not entitled to a particular allowance the same cannot be included in the “ordinary rate of wages”. In the present case, admittedly, the respondents are not entitled to the house rent allowance and as such the same cannot be included while determining the ordinary rate of wages. It would be wholly fallacious to include an allowance ‘notionally’ which has been excluded specifically. The legislature in its wisdom included the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles in the definition of “ordinary rate of wages”. The legislature has not done so in respect of the house rent allowance. https://hcservices.ecourts.gov.in/hcservices/ Ultimately, the Hon'ble Supreme Court has held that the respondents and other employees of the Government Mint who are occupying government accommodation are not entitled to include the house rent allowance as a part of the "ordinary rate of wages" for computing the overtime allowance. On the basis of the above, the learned counsel for the petitioners have prayed to set aside the order passed by the Tribunal and to allow the writ petitions. 11.The learned counsel appearing for the respondents 1 to 4 brought to our notice the Office Memorandum, dated 12.06.2000, issued by the Ministry of Labour, wherein it is stated that Clause (2) of Section 59 of the Factories Act, 1948 provides that "ordinary rate of wages means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of food grains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work. It is also stated in the said memorandum that since the transport allowance has not been excluded from the compensatory allowance etc. under Clause (2) of Section 59 of the Factories Act, 1948 and hence, Transport Allowance should be included in the basic rate of wages for the purpose of computation of Over Time Allowance. 12. The learned counsel for the respondents 1 to 4 also relied on the Office Memorandum, dated 14.11.2002, issued by the Ministry of Finance, wherein in consideration of the reference from the Department of Economic Affairs seeking clarification on the subject, whether Transport Allowance is to be included in computing wages for the purpose of OTA, and also in consideration of a similar reference, which was received from the Ministry of Defence, the Ministry of Finance gave opinion to the effect that the wages under Section 59 of the Factories Act should include only basic wages plus Dearness Allowance/Additional Dearness Allowance and any other allowances which are uniformly applicable to all the Government employees. The Ministry of Finance further opined that under the Factories Act, House Rent Allowance, Conveyance Allowance, Clothing Allowance, Washing Allowance etc. are excluded for the purpose of computation of wages for OTA and Transport Allowance, which has been introduced with effect from 01.08.1997 to partially compensate for expenses incurred in traversing between residence and office is also a compensatory allowance and should not be included in the wages for computation of OTA and moreover, for those categories of Staff governed by the instructions of DOPT, the element of HRA, Transport Allowance etc. are not taken into account for calculation of OTA and hence, the Ministry is of the view that the compensatory allowances including Transport Allowance should not be included in Wages for the purpose of calculation of OTA. Finally, the Ministry of Finance, requested the Ministry of Labour to reconsider the matter https://hcservices.ecourts.gov.in/hcservices/ in consultation with the Ministry of Law (De0artment of Legal Affairs) to arrive at the decision about the allowances that are to be considered in ordinary rate of wages for the purposes of calculation of OTA for uniform application of Rules by different Ministries/ Departments. 13. The learned counsel for the respondents 1 to 4 further submitted that on the basis of the opinion expressed by the Ministry of Finance, the Ministry of Labour issued an Office Memorandum, dated 19.11.2007, to the effect that on the basis of the official memorandum, dated 16.03.2007, issued by the Ministry of Defence, the matter has been considered in the Ministry of Labour and Employment in consultation with the legal advisor of the Ministry and the Ministry of Labour and Employment has decided that wages are remuneration for work and when the transport allowance is compensatory allowance which is reimbursed and hence, may not be taken into account for calculating OTA under the Factories Act, 1948. Finally, it is submitted by the learned counsel for the respondents 1 to 4 that on the basis of the aforesaid memorandums, the impugned order has been passed. 14.We have gone through the entire materials placed on record. It is seen from the perusal of the records that aggrieved of the order passed by the Tribunal, wherein original applications were filed by the employees working in the third respondent factory challenging the order, dated 26.06.2009, issued by the first respondent, wherein House Rent Allowance, Travelling Allowance, Small Family Allowance were excluded from the overtime allowance for the purpose of computation of the same, the present writ petitions have been filed. 15. It is an admitted case that the third respondent factory is governed by the provisions of the Factories Act. It is also the case of the employees that they are enjoying the overtime allowances all along and suddenly, a decision was taken to discontinue the payment of the aforesaid allowances by relying on Section 59(2) of the Factories Act, wherein Wages and Allowances were defined, to the effect that 'ordinary rate of wages' means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of food grains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work'. When the definition of the term, 'wages' specifically excludes bonus and overtime wages to calculate the overtime work and the aforesaid allowances were excluded only on the basis of the opinion given by the legal advisor of the Ministry of Law and not in consultation with the Ministry of Law (Department of Legal Affiars), as requested by the Ministry of Labour, based on which, the Tribunal has https://hcservices.ecourts.gov.in/hcservices/ dismissed the original applications by a common order dated 24.12.2010, which, in our considered opinion, is illegal. 16. As rightly contended by the learned counsel for the petitioners, as per the definition of Sub Section(2) of Section 59 of the Factories Act, calculating the 'ordinary rate of wages means, basic wages plus such allowances including the cash equivalent of the advantage accruing through the concessional sale to workers of food grains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work. In the absence of any rules governing the subject with regard to the exclusion of the abovesaid allowances, from the definition of ordinary rate of wages, as per Sub Section 2 of Section 59 of the Factories Act and whenthe petitioners are catering the same all along, taking a decision, which is contrary to the definition as contained in Sub Section 2 of Section 59 of the Factories Act, is unsustainable in law. 17. It is also seen from the perusal of the records that when the Ministry of Finance, through their official memorandum, dated 14.11.2002, has requested the Ministry of Labour to reconsider the matter in consultation with the Ministry of Law (Department of Legal Affairs), but after consulting with the legal advisor of the Ministry, the Ministry of Labour and Employment has issued the above memorandum, which in our considered opinion, is not legal, since consulting the Ministry of Law is different from consulting the legal advisor of the Ministry. We are unable to understand as to what is the legal sanctity attached to the advise given by the legal advisor of the Ministry to exclude the abovesaid allowances to calculate the basic rate of wages. In the absence of any rule to exclude the aforesaid allowances from the definition of the basic wage, when the Section excludes only two items, viz., bonus and wages for overtime work, the action of the first respondent in excluding the said allowances without any authority, but only based on the opinion expressed by the legal advisor of the concerned Department, which cannot be considered to be the power given to exclude those allowances, and also the order passed by the Tribunal in rejecting the claim made by the petitioners based on the aforesaid memorandum, are considered to be illegal and unsustainable in law. https://hcservices.ecourts.gov.in/hcservices/ 18. For the foregoing reasons, the order passed by the Tribunal is liable to be set aside and it is, accordingly, set aside. The writ petitions are allowed. Connected M.Ps. are closed. However, there will be no order as to costs. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar. bs. To 1. Union of India rep. by its Secretary to Government, Ministry of Defence, Department of Defence Production, South Block, New Delhi-110 001. 2. The Chairman, Ordnance Factory Board, No.10-A, S.K.Bose Road, Kolkatta-700 001. 3.The Senior General Manager, Heavy Vehicles Factory, Avadi, Chennai-600 054. 4.The Principal Controller of Accounts (Factories), No.10-A, S.K.Bose Road, Kolkatta-700 001. 5.The Registrar, Central Administrative Tribunal, Chennai Bench, Chennai. 6.The Management, Heavy Vehicle Factory, Avadi, Chennai. 7.The Director General of Quality Assurance, Ministry of Defence, Department of Defence Production, South Block, New Delhi-110 001. 8.The Under Secretary, Ministry of Defence Sena Bhavan, New Delhi. 9.The General Manager, Engine Factory, Avadi, Chennai-600 054. https://hcservices.ecourts.gov.in/hcservices/ 10.The General Manager, Ordnance Clothing Factory, Avadi, Chennai-600 054. 11.The Controller, Controllerate of Quality Assurance, (Heavy Vehicles), Avadi, Chennai. 12.The General Manager, Cordite Factory, Aravankadu, Nilgiris District. 13.The Controller of Finance & Accounts (Fys) C/o.Heavy Vehicles Factory, Avadi, Chennai. 1 cc to Mr.S.Haja Mohideen Gisthi,SCGSC, Sr.No.73537 1 cc to Mr.G.B.Saravanabhavan, Advocate, Sr.No.73509 4 cc to Mr.R.Suresh Kumar, Advocate, Sr.No.73354 to 73357 2 cc to M/s.Paul & Paul, Advocate, Sr.No.73379 5 cc to Mr.Karthik, Advocate, Sr.No.73755 W.P.Nos.609, 1276, 1466, 1980 to 1982, 9076 and 21035 of 2011 CK (CO) kk,tp,eu, rh 22/12 https://hcservices.ecourts.gov.in/hcservices/