Case: Bennett Coleman &amp; Co. (P) Ltd Vs. Punya Priya Das Gupta

By its letter dated 16 January 1953 the appellant-company appointed the respondent as a staff correspondent at Gauhati on a basic salary of Rs. 300 and dearness allowance at 40 per cent. thereof in addition to a fixed conveyance allowance of Rs. 100 per month. Sometime thereafter the respondent was transferred to the companys branch office at Delhi where he worked as a special correspondent. By 1963 the remuneration payable to him came to Rs. 700 as basic pay, Rs. 497 as dearness allowance, Rs. 200 per month as car allowance in addition to a free telephone and free newspapers. On 8 October 1963, while he was on leave, the respondent tendered his resignation. On 14 October 1963 P. K. Roy, the companys general manager, informed the respondent that his letter of 8 October 1963 could not be considered as one of resignation as under the companys rules he would have first to report for duty and then to give a notice. On 21 October 1963, however, the company accepted the resignation with effect from that date and thereupon the respondent joined the India Express on 23 October 1963. Meanwhile, one V. G. Karnik on behalf of the company, informed the respondent by his letter dated 19 November 1963 that in the absence of a proper notice by him there could be no termination of employment and that "your reported acceptance is in contravention of the terms and conditions of service of this company." The respondent had, in the meantime, claimed compensation for leave due to him, to which claim the said letter of Karnik replied that the companys rules did not permit any such compensation where an employee had resigned. On 21 November 1963 the respondent wrote to the said Roy (Ex. W. 4)after he had tendered his resignation there was a discussion between them when the matter of acceptance of his resignation was amicably settled and that it was thereafter that he joined the Indian Express;(2) the letter of Karnik that there was no termination of his employment was not correct;(3) after 21 October 1963 he had gone to the companys office to settle his accounts and collect the dues payable to him as also the letter of acceptance of his resignation but he was told that the accounts were not yet ready and he was not then paid even his salary and dearness allowance due up to 20 October 1963 although "I had asked for these amounts at least";(4) the letter accepting his resignation was held back until he was prepared to sign a document "purporting to waive all my rights to leave-salary" which he had first refused to sign;(5) on receiving the said letter of Karnik he had thought necessary to get a written acceptance of resignation, that, as apprehended by him, that letter was handed over to him on that day only after he accepted a cheque for Rs. 2.810.47 and had given receipt therefore "in full and final settlement of all my claims" and that he wanted to specify in that receipt that full and final settlement on his side did not include compensation for one months leave due to him but the accountant did not allow him to dostatement of account which was given to the respondent on 21 November 1963 and on which he signed the said receipt stated that he had received the said cheque "in full and final settlement of all my claims against the company subject to the bonus for 1963 if declared and payable to me." The statement of account mentioned Rs. 901.34 only as remuneration for twenty days of October 1963 on the basis of his monthly remuneration being Rs. 1, 397, comprised of Rs. 700 as basic salary, Rs. 497 as dearness allowance and Rs. 200 as car allowance. The statement of account thus shows that though he was on leave in October 1963, the company included the car allowance while calculating his wages due for these twenty days. But it also shows that no compensation for leave due to him was paid and further that in calculating the gratuity payable to him the monetary value of free telephone and free newspapers and the car allowance were not included as part of his wages. In reply to the respondents letter of 21 November 1963, the said Roy, by his letter of 5 December 1963, wrote that as the respondent had not taken away the companys letter of acceptance of resignation by the time Karnik addressed the said letter, Karnik addressed the said letter, Karnik was "right on facts" but, in view of the settlement of accounts, "it was better to forget the past and part amicably." He also made it clear that the respondents claim for leave compensation was not admissible under the companys rules.The respondent thereafter applied to the Delhi Administration and the letter, as aforesaid, referred his claim to the labour court for adjudication. In his statement of claim before the labour court, the respondent claimed that the monthly wages payable to him were Rs. 700 basic, Rs. 497 as dearness allowance, Rs. 200 conveyance allowance and Rs. 50 being the estimated value of the benefit of a free telephone and newspapers, aggregating Rs. 1, 447 per month. He claimed gratuity computable on the basis of Rs. 1, 447 as being his monthly wages, Rs. 1, 447 as compensation for the months wages, Rs. 1, 447 as compensation for the months leave, in all Rs. 6, 000.34. He did not deduct from the said claim the said amount of Rs. 2, 810.47 as he had not encashed the cheque given to him against the receipt dated 21 November 1963. The company in its written denied the claim relying on the said receipt and further denied that the car allowance and the monetary value for the free telephone and newspapers could be included in the wages payable to the respondent either as due to him for calculating gratuity. Before the labour court the company did not dispute the value of the benefit of the free telephone and newspapers estimated by the respondent, but it raised the question whether the said value and the car allowance formed part of the respondents wages and whether the amount of gratuity payable to him could be ascertained on the footing of their being part of his wages. The labour court held that there was no evidence that the car allowance was not payable to the respondent while he was on leave as was the case in respect of another working journalist, C. V. Vishwanath, whose claim also the labour court was trying along with that of the respondent. The labour court found this difference a significant one and held that the car allowance had to be taken as part of the wages. The labour court also held that the car allowance and the free telephone and newspapers where an allowance and an amenity respectively falling under the definition of S.2(rr) of the Industrial Disputes Act, 1947, both forming the component parts of monthly wages payable to the respondent. As regards the leave, the respondent was undoubtedly entitled to thirty days leave. But the companys plea was, firstly, that its rules did not permit compensation for such leave and secondly, that it was set off against the period of notice which the respondent was required to give. No rule, however, were produced to show that they contained any provision disallowing such compensation. As regards the notice-period of one months, the labour court held that as the resignation dated 8 October 1963 was accepted with effect from 21 October 1963 there was compliance of 13 days only and therefore the management was not liable to pay for this balance of 17 days leave. The labour court rejected the companys plea that the receipt given by the respondent in full settlement of all his claims estopped him from making these claims on the ground that as these items were claimed under the Act there could be no estoppel against law. In the result, the labour court held that the respondent was entitled to claim car allowance at Rs. 200 per month for telephone and newspapers and compensation for 13 days leave that the first two were parts of his wages, that his monthly remuneration was, therefore, Rs. 1, 4447 and gratuity equivalent to 5 1/2 months wages would have to be calculated on the basis of Rs. 1, 447 being his wages per month and directed the the company to pay on the aforesaid calculations Rs. 2, 002 over and above Rs. 2, 810.47 for which the company had issued the said

Court's reasoning:
We are of the view that this decision does not warrant such a contention or that there is any conflict between this decision and the two earlier decisions. The question before the Court was the distinction between an employee and an independent contractor and it was only while describing the characteristics of the two relationships that the learned Judge observed that unless there was a relationship of master and servant and person concerned "is employed" he could not be regarded as "a workman" as defined by the Act. The Court was not concerned in that case with the question position in Central Provinces Transport Services, Ltd. [1957 - I L.L.J. 477] (vide supra) whether an employee who has been discharged or dismissed and who claims a relief such as reinstatement is a workman or not. Not having to consider such a question and being only concerned with the distinction an employee and an independent contractor, the observation made by the Court to delineate the features of the two relationships cannot be regarded either as laying down that an ex-employee is not a workman or as being in conflict with the two earlier decision which are specific decisions on the definition of "a workman" in theassuming that there is such a conflict as contended, we do not have to resolve that conflict for the purposes of the problem before us.The definition S.2 of the present Act commences with the words "in this Act unless the context otherwise requires" and provides that the definitions of the various expressions will be those that are given there. Similar qualifying expressions are also to be found in the Industrial Disputes Act, 1947, the Minimum Wages Act, 1948, the Central Provisions and Berar Industrial Disputes Settlement Act, 1947, and certain other statues dealing with industrial questions. It is, therefore, clear that the definitions of "a newspaper employee" and "a working journalist" have to be construed in the light of and subject to the context requiringcontention that the respondent was not entitled to maintain his application as he was not in the service of the appellant-company on the date of his claim before the labour court cannot benext contention was that the respondent, having signed the said receipt in full settlement of all his claims and having thereby induced the company to accept his resignation without insisting on a full months notice, was estopped from making claims in respect of his leave one month, the car allowance and the free telephone and newspapers and for including them as part of his wages for calculating gratuity. Certain decisions of this Court seem, however, to have expressed doubt whether technical pleas such as acquiescence, estopple and waiver suitably apply to industrial adjudication. But assuming, that the rule of estoppel, as incorporated in S.115 of the Evidence Act, were to apply, the foundation of that rule is that it is inequitable and unjust to a person, that if another person by a representation induces him to act as he would not have otherwise acted, the person who made the representation should be allowed to deny the effect of his former statement on the loss, and injury of the person who has acted on it [see Sarut v. Gopal (I.L.R. 19 I.A. 203). The rule is one of evidence only and does not create any substantive right or confer any cause of action on theargument, however, cannot be accepted as neither of them can be said to be remuneration payable in respect of employment or work done in such employment. Neither the car allowance nor the benefit of the free telephone was given to the respondent in respect of his employment or work done in such employment as the use of the car and the telephone was not restricted to the employment, or the work of the respondent as the special correspondent. There was no evidence that the car allowance was fixed after taking into consideration the expenses which he would have ordinarily to incur in connexion with his employment or the work done in such employment. Even if the respondent had not used the car for conveying himself to the office or to other places connected with his employment and had used other alternative or cheaper means of conveyances or none at all, the car allowance would still have had to be paid. So too, the bills for the telephone and the newspapers whether he used them or not in connexion with his employment, or his work as the special correspondent. Therefore, we have to turn to the later part of the definition and see if the two items properly fall thereunder. So far as the car allowance is concerned, there was, as aforesaid nothing to suggest that it was paid to reimburse him of the expenses of conveyance which he would have to incur for discharging his duties as the special correspondent, or that it was anything else than an allowance within the meaning of S.2(rr) of that Act. It would, therefore, fall under the inclusive part (i) of the definition. Likewise, the benefit of the telephone and newspapers was allowed to the respondent not merely for the use thereof in connexion with his employment or duties connected with it. Both the car allowance and the benefit of the free telephone and newspapers appear to have been allowed to him to directly reduce the expenditure which would otherwise have gone into his family budget and were therefore items relevant in fixation of fair wages [see Hindustan Antibiotics, Ltd. v. Their workmen (1967 - I L.L.J. 114).] That being the position, the two items could on the facts and circumstances of the present case be properly regarded as part of the respondents wages and had to be taken into calculations of the gratuity payable toscheme of all these acts dealing with industrial questions is to avail of the benefit of their provisions the only requirements being that the claim in dispute must be one which has arisen or accrued whilst the claimant was in the employment of the person against whom it is made. There can, therefore, be no doubt that the definitions of a "newspaper employee" and "working journalist" being subject to a context to the contrary, the benefit of Ss. 5 and 17 is available to anthough he has to be ceased to be in the employment of that particular newspaper establishment at the time of his application for gratuity. Thecontention that the respondent was not entitled to maintain his application as he was not in the service of theon the date of his claim before the labour court cannot bet contention was that the respondent, having signed the said receipt in full settlement of all his claims and having thereby induced the company to accept his resignation without insisting on a full months notice, was estopped from making claims in respect of his leave one month, the car allowance and the free telephone and newspapers and for including them as part of his wages for calculating gratuity. Certain decisions of this Court seem, however, to have expressed doubt whether technical pleas such as acquiescence, estopple and waiver suitably apply to industrial adjudication. But assuming, that the rule of estoppel, as incorporated in S.115 of the Evidence Act, were to apply, the foundation of that rule is that it is inequitable and unjust to a person, that if another person by a representation induces him to act as he would not have otherwise acted, the person who made the representation should be allowed to deny the effect of his former statement on the loss, and injury of the person who has acted on it [see Sarut v. Gopal (I.L.R. 19 I.A. 203). The rule is one of evidence only and does not create any substantive right or confer any cause of action on theother. It comes into operation if a statement as to the existence of a fact has been made with the intention that the other person to whom it is made should believe and act on it and that that another person does in fact act upon the faith of it. The question whether the respondent is estopped from making his said claims may be looked at firstly, as regards hisand secondly, as regards his claims for car allowances and free telephone and newspapers. As to the claim for leave due to him, the record of the case makes it clear that he had been making that claim from the very outset. Though the receipt given by him mentions that it was given in full settlement of all his claims, the respondent on that very day in his letter Ex. W. 4 to the said Roy protested that though he wanted to clarify in that receipt that it was in full settlement of his salary and dearness allowance for the twenty days of October 1963 and gratuity only, he was not allowed to make that reservation although he had already preferred his claim for compensation for one months leave due to him. We must note that though this letter went in as Ex. W. 4 before the labour court, the company led no evidence to controvert the statements made therein. The reason for not doing so seems to be that the respondent had made the claim before one Mitra, the accountant in the Delhi office, and that claim was a matter of dispute. This position emerges from Roys reply dated 5 December 1963 to the respondents said letter of 21 November 1963 wherein the stand taken by Roy was that the respondent was not entitled to compensation for leave, not because he had given up that claim when he had signed the said receipt, but because the companys rules did not permit such compensation. It is, therefore, manifest that the respondent did not make any representation when he signed the said receipt that he had waived his claim foror that the company did any act on any such representation which otherwise it would not have done. In spite of the letter Ex. W. 4, the company failed to produce before the labour court its rules under which it was said that such a claim was not permissible. In its special leave petition in this Court, the company, however, cited a rule but we could take no notice of it as no application for producing the rules or proving them as additional evidence was made and it was hardly fair or just to take notice of it at such a late stage without an opportunity to the respondent to verify or controvert it. Roys reply also indicates that the companys case, that the respondents claim for compensation for leave was at the time of preparing his statement of account adjust oragainst its claim for thecould not be correct. For, if that was so, Roy would have straightaway said so in his said reply, or in any event the company would have led evidence of its accountant to that effect before the labour court. The rule of estoppel thus could not be invoked against the claim for compensation fornext examine the question whether the respondent was precluded from making the rest of his claim. The burden of proving the ingredients of S.115 of the Evidence Act lies on the party claiming estoppel. The representation which is the basis for the rule must be clear and unambiguous and not indefinite, upon which the party relying on it is said to have, in good faith and in belief of it, acted. The statement of account prepared at the time when the respondent gave the said receipt appears to indicate that the benefit of the free telephone and newspapers and the car allowance were not taken into account and gratuity due to the respondent was calculated on the amount of pay being comprised of basic wages and dearness allowance only. But the inference that the respondent had given his aforesaid claims when he passed the said receipt appears to be rebutted by the following factsthough the registration was accepted on 21 October 1963 the letter of acceptance was not communicated to the respondent till 21 November 1963 when the company obtained from the respondent the said receipt;(2) in the meantime, the respondent received Karniks said letter of 19 November 1963 to the effect that there was no termination of the respondents service in the absence of a months notice, and on receipt of which, according to the respondent, he considered it necessary to secure the letter of acceptance of his resignation from the company. If the termination of his service depended on the giving of a months notice, how was it that the companys manager, DSouza, had accepted the resignation and signed the letter of acceptance Ex. W. 1 on 21 October 1963 ?(3) the company was aware, as Karniks said letter shows, that on the basis that his resignation was accepted with effect from 21 October 1963 the respondent had joined the Indian Express on 23 Octoberrespondents case was that it was after he was told that his resignation had been accepted that he joined Indian Express. But when he received Karniks said letter he decided that he could not rest content without jeopardising his interest on the mere oral intimation of acceptance of his resignation, and therefore, went to the companys office to secure a written acceptance when he was told that unless he passed a receipt in full settlement of his claims, the letter of acceptance would not be issued to him. There appear to be two good reasons why the respondents case cannot be easily discarded. Firstly, since his resignation was accepted with effect from 21 October 1963 was made ready and signed by the companys manager, it would ordinarily have been communicated to him. If the company had any claim against him or if it wanted that his account should be settled before the letter was issued to him, surely an intimation to that effect would have been given to him. Secondly, though the respondent had put on record his version as to how the said receipt was obtained from him as early as 21 November 1963, i.e. on the very day that the said receipt was secured from him, on refutation of any of the allegations in that letter is to be found in Roys reply to it dated 5 December 1963 save that the respondents claim for compensation for leave period was not admissible under the companys rules, it is significant that there was no denial in that reply that the receipt was obtained from the respondent in the manner alleged in the said letter dated 21 November 1963. Even at the later stages the company did not examine its accountant before the labour court to refute the said allegations. The statements of the respondent in that letter having thus remained unchallenged, the labour court could not reject them. In these circumstances, it becomes doubtful whether he could be said to have been estopped from making the said claims on the ground only of the said receipt, if that receipt was obtained as alleged by him, under the stress of circumstances. In this connexion the fact he kept the said cheque uncashed is not totally without relevance. Under S.115 of the Evidence Act the representation which estops a person making it from acting contrary to it is one on the belief of which the other persons acts in a manner he would not have done but for it and on believing it to be true. Such a conclusion is difficult in face of the uncontradicted statements in the letter Ex. W. 4 that the management would not give him the letter of acceptance of his resignation unless he signed the said receipt in full settlement of all his claims. The plea of estoppel made on behalf of the company, therefore, cannot be accepted.The third contention was that the monetary value of the free telephone and newspapers and the car allowance could not be included as part of his wages for calculating gratuity. The value in terms of money of the benefit of free telephone and free newspapers, as estimated by the respondent, was not in question. But the argument was that this benefit as also the car allowance were given to the respondent by way of reimbursement for express which as a special correspondent he would otherwise have had to incur for the proper and efficient discharge of his duties. The two items, therefore, were neither an allowance nor an amenity. The facts, however, are that the telephone was installed by the company at the respondents residence and stood in his and not in the companys name. All payments connected with it, including charges for calls were made by the company. There was no restriction that he could use the telephone only for his official work or that he could not use it for personal calls. He was not called upon to keep an account of personal calls, the payment of which he would be called upon to make. Nor was any estimated amount for such personal calls either demanded or deducted from his wages. The newspapers were subscribed by the respondent but the bills for them were paid by the company. It was not the case of the company that the bills for them would be paid by it provided they were made use of by the respondent for his work as a special correspondent. As regards the car allowances, the car belonged to and stood registered in his name but the company paid him a monthly allowance of Rs. 200. There was no evidence whatsoever, not even a suggestion in the correspondence, that that amount was estimated as being equivalent to the express of conveyance which the respondent would incur in the discharge of his duties. No such indication is to be found in the companys evidence, nor was such a suggestion put to the respondent when he examined himself before the labour court.Since wages has not been defined in the Act, its meaning is the same as assigned to it in the Industrial Disputes Act. Under S.2(rr) of that Act, "wages" means all remuneration capable of being expressed in terms of money, which would, if the terms of employment, expressed or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment, andsuch allowances (including dearness allowance) as the workman is for the time entitled to;(ii) the value of any house accommodation, or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;(iii) any travelling concession; but does not include any bonus and other items mentioned therein.