Supreme Court clarifies Double Overtime for Supervisors in Security Printing & Minting Corporation case: Security Printing & Minting Corporation of India Ltd. & Ors. vs. Vijay D. Kasbe & Ors. (2023) INSC 379 (18 April 2023)

Date of the Judgment: 18 April 2023
Citation: (2023) INSC 379
Judges: V. Ramasubramanian, J., Pankaj Mithal, J.
Can supervisors in government-owned printing and minting corporations claim double overtime pay? The Supreme Court of India recently addressed this complex issue, examining whether these employees, often performing duties beyond manual labor, are entitled to the same overtime benefits as other workers under the Factories Act, 1948. This judgment clarifies the scope of overtime eligibility for supervisors in these specific government entities. The majority opinion was authored by Justice V. Ramasubramanian.

Case Background

The case revolves around a dispute over double overtime allowance for supervisory staff in the Security Printing & Minting Corporation of India. Initially, these production units were under the Ministry of Finance, Government of India. In 2006, the Security Printing & Minting Corporation of India Ltd. was formed to take over the management of these units. This transfer included the workforce and ongoing legal disputes.

In 1988, the Ministry of Finance issued an order providing a special allowance in lieu of overtime for non-gazetted supervisory staff working extended hours. However, a subsequent order in 2000 clarified that staff with a basic pay above Rs. 2,200 per month were not eligible for overtime. Several supervisors then filed writ petitions in the High Court of Judicature at Bombay, which were later transferred to the Central Administrative Tribunal.

The Central Administrative Tribunal initially dismissed these claims, stating lack of jurisdiction under the Factories Act, 1948. However, the High Court remanded the matter back to the Tribunal multiple times for fresh consideration. The Tribunal eventually ruled in favor of the employees, granting double overtime allowance, but this was challenged by the Union of India and the Corporation. The High Court ultimately upheld the Tribunal’s decision, leading to the current appeal before the Supreme Court.

Timeline:

Course of Proceedings

The initial writ petitions filed by the supervisors were transferred to the Central Administrative Tribunal in 1995. The Tribunal initially dismissed the applications, stating it lacked jurisdiction under the Factories Act, 1948. The High Court remanded the matter back to the Tribunal for fresh consideration. After the remand, the Tribunal allowed the application filed by A.K. Biswas and others, but the High Court set aside this order and remanded the matter back to the Tribunal for a second time.

Following the second remand, the Tribunal dismissed the application filed by A.K. Biswas and others. However, in a separate set of applications, the Tribunal ruled that the applicants were entitled to Double Over Time Allowance under Section 59(1) of the Factories Act, 1948. The High Court dismissed the writ petitions filed by the Union of India and the Corporation, upholding the Tribunal’s decision. The High Court also allowed the writ petition filed by A.K. Biswas and others, granting relief to those who had not compromised with the management.

Legal Framework

The core legal issue revolves around the interpretation of the Factories Act, 1948, specifically:

• Section 2(m): Defines “factory”.
• Section 2(l): Defines “worker”.
• Section 59(1): States that a worker working overtime is entitled to double wages.
• Section 64(1): Empowers the State Government to make rules exempting certain categories of workers from the provisions of Chapter VI of the Act.

The Maharashtra Factories Rules, 1963, specifically Rule 100, exempts supervisors from the provisions of Chapter VI of the Factories Act, 1948, provided they do not perform manual or clerical work as a regular part of their duties.

The court also considered the Administrative Tribunals Act, 1985, which defines “service matters” to include issues related to remuneration and allowances for persons appointed to civil services or holding civil posts under the Union.

The Fundamental Rules and Supplementary Rules (FRSR), dating back to 1922, were also considered, which govern the terms and conditions of service for civil servants. Rule 11 of the Fundamental Rules states that a government servant’s whole time is at the disposal of the government without claim for additional remuneration.

The Payment of Wages Act, 1936, was also discussed.

Arguments

Appellants’ (Corporation) Arguments:

• The supervisors’ duties, as reflected in their Annual Confidential Reports (ACRs), were primarily supervisory, involving control over 50 to 100 workers.
• Relying on the case of Burmah Shell Oil Storage and Distribution Company of India Ltd. vs. The Burma Shell Management Staff Association & Ors. [1970 (3) SCC 378], the appellants argued that a person whose predominant work is supervisory should not be considered a workman merely because they perform incidental clerical or mechanical work.
• The Tribunal and High Court did not properly interpret Rule 100 of the Maharashtra Factories Rules, 1963.
• Supervisors, who enjoy higher pay scales than workers, should not be entitled to overtime allowance.

Respondents’ (Supervisors) Arguments:

• The “dominant nature test” from Burmah Shell Oil Storage and Distribution Company of India Ltd. does not apply here, as the definition of “workman” under the Industrial Disputes Act, 1947, is different from the definition of “worker” under the Factories Act, 1948.
• The Tribunal and High Court found that the supervisors performed manual or clerical work as a regular part of their duties, making Rule 100 of the Maharashtra Factories Rules, 1963, inapplicable.
• The proviso to Section 64(1) of the Factories Act, 1948, carves out an exception for persons drawing wages not exceeding the limit specified in Section 1(6) of the Payment of Wages Act, 1936, making Rule 100 inapplicable to them.
• The Central Administrative Tribunal had passed orders in favor of similarly placed supervisors in other applications.

The innovativeness of the argument lies in the respondents’ reliance on the proviso to Section 64(1) of the Factories Act, 1948, arguing that it carves out an exception for persons drawing wages not exceeding the limit specified in Section 1(6) of the Payment of Wages Act, 1936, making Rule 100 inapplicable to them.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether persons employed as Supervisors are entitled or not, to Double Over Time Allowance in terms of Section 59(1) of the Factories Act, 1948?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

• Burmah Shell Oil Storage and Distribution Company of India Ltd. vs. The Burma Shell Management Staff Association & Ors. [1970 (3) SCC 378] – The Court discussed this case in the context of the “dominant nature test” for determining whether an employee is a “workman” under the Industrial Disputes Act, 1947. However, the Court ultimately did not rely on this case, as the definition of “worker” under the Factories Act, 1948, does not have a similar exclusion for supervisory staff. The Supreme Court of India, observed that the definition of “workman” in Section 2(s) of the 1947 Act specifically excludes persons employed in a supervisory capacity, but such an exclusion is not there in the definition of the very same word “worker” in Section 2(l) of the 1948 Act.
• Section 2(m) of the Factories Act, 1948 – Definition of “factory”.
• Section 2(l) of the Factories Act, 1948 – Definition of “worker”.
• Section 59(1) of the Factories Act, 1948 – Entitlement to double wages for overtime work.
• Section 64(1) of the Factories Act, 1948 – Power of the State Government to make exempting rules.
• Rule 100 of the Maharashtra Factories Rules, 1963 – Exempts certain supervisory staff from the provisions of Chapter VI of the Factories Act, 1948.
• Section 3(q) of the Administrative Tribunals Act, 1985 – Definition of “service matters”.
• Article 309 of the Constitution of India – Power to regulate the recruitment and conditions of service of persons serving the Union or a State.
• Article 313 of the Constitution of India – Continuation of existing laws.
• Fundamental Rules and Supplementary Rules (FRSR) – Rules governing the terms and conditions of service for civil servants.
• Rule 11 of the Fundamental Rules – States that a government servant’s whole time is at the disposal of the government.
• Section 1(6) of the Payment of Wages Act, 1936 – Relating to the applicability of the act based on wages.

Judgment

How each authority was viewed by the Court?

• Burmah Shell Oil Storage and Distribution Company of India Ltd. [1970 (3) SCC 378]*: The Court did not apply this case due to differences in the definition of “workman” and “worker” in the respective Acts.
• Section 2(m) of the Factories Act, 1948: The Court noted this definition to establish that the units were indeed factories.
• Section 2(l) of the Factories Act, 1948: The Court noted this definition to establish that the employees were indeed workers.
• Section 59(1) of the Factories Act, 1948: The Court acknowledged this provision as the basis for the claim of double overtime allowance, but held it was not applicable to the supervisors in this case.
• Section 64(1) of the Factories Act, 1948: The Court acknowledged this provision as the basis for the State Government’s power to make exempting rules.
• Rule 100 of the Maharashtra Factories Rules, 1963: The Court upheld the applicability of this rule, stating that the supervisors were not performing manual or clerical work as a regular part of their duties.
• Section 3(q) of the Administrative Tribunals Act, 1985: The Court noted this definition to establish jurisdiction of the tribunal.
• Article 309 of the Constitution of India: The Court noted this to highlight the power to regulate service conditions.
• Article 313 of the Constitution of India: The Court noted this to highlight the continuation of existing laws.
• Fundamental Rules and Supplementary Rules (FRSR): The Court noted these rules as governing the terms and conditions of service for civil servants.
• Rule 11 of the Fundamental Rules: The Court cited this rule to emphasize that government servants are expected to be available for work at all times.
• Section 1(6) of the Payment of Wages Act, 1936: The Court held that this provision was inapplicable to the respondents.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The distinction between government service and private employment, and the applicability of statutory rules governing the conditions of service for government employees.
• The fact that the supervisors were holders of civil posts or in the civil services of the State and were therefore subject to the service rules.
• The contradictory findings of the Central Administrative Tribunal in different cases involving similarly placed employees.
• The interpretation of Rule 100 of the Maharashtra Factories Rules, 1963, and the finding that the supervisors were not performing manual or clerical work as a regular part of their duties.
• The inapplicability of the proviso to Section 64(1) of the Factories Act, 1948, read with Section 1(6) of the Payment of Wages Act, 1936.

The sentiment analysis of the reasons given by the Supreme Court indicates the following:

The ratio of fact to law in the judgment can be summarized as follows:

This indicates that while the factual aspects of the case, such as the duties of the supervisors and the conflicting findings of the Tribunal, were considered, the legal aspects, such as the interpretation of the Factories Act, 1948, and the service rules, played a more significant role in the Court’s decision.

The Court’s reasoning can be summarized as follows:

• The Court first considered whether the supervisors were covered by the Factories Act, 1948, and found that while the units were factories and the employees were workers, the supervisors, being civil servants, were also subject to service rules.
• The Court then considered whether the supervisors were performing manual or clerical work as a regular part of their duties, as this would make Rule 100 of the Maharashtra Factories Rules, 1963, inapplicable. The Court disagreed with the Tribunal and High Court and held that the supervisors were not performing such work.
• The Court also considered the service rules applicable to civil servants, which state that a government servant’s whole time is at the disposal of the government without claim for additional remuneration.
• The Court concluded that the supervisors, being holders of civil posts or in the civil services of the State, could not claim benefits under the Factories Act, 1948, without considering the applicable service rules and that the proviso to Section 64(1) of the Factories Act, 1948, cannot be pressed into service.

The Court rejected the argument that the supervisors were entitled to double overtime allowance based on the Factories Act, 1948, as they were governed by service rules applicable to civil servants.

The majority opinion was authored by Justice V. Ramasubramanian, with Justice Pankaj Mithal concurring. There were no dissenting opinions.

The Supreme Court’s decision has significant implications for future cases involving government employees and their claims under labor laws. The Court emphasized the importance of considering the specific service rules applicable to government employees and the distinction between government service and private employment.

The Court did not introduce any new doctrines or legal principles but clarified the application of existing laws and rules to the specific facts of the case.

The court quoted the following from the judgment:

• “The claim of the respondents before the Tribunal was not based on any statutory rule but based entirely upon Section 59(1) of the 1948 Act.”
• “Unlike those employed in factories and industrial establishments, persons in public service who are holders of civil posts or in the civil services of the Union or the State are required to place themselves at the disposal of the Government all the time.”
• “The chart of duties indicated in the ACRs does not show that the respondents are required to perform manual labour or clerical work as a regular part of their duties.”

Key Takeaways

The key takeaways from this judgment are:

• Supervisors in government-owned corporations, who are considered civil servants, cannot automatically claim double overtime allowance under the Factories Act, 1948.
• The service rules applicable to civil servants take precedence over the provisions of the Factories Act, 1948, in determining overtime eligibility.
• The “dominant nature test” used under the Industrial Disputes Act, 1947, is not applicable when determining the definition of “worker” under the Factories Act, 1948.
• The proviso to Section 64(1) of the Factories Act, 1948, cannot be pressed into service if the provisions of the Payment of Wages Act, 1936, are not applicable to the employees.
• The findings of the Central Administrative Tribunal must be consistent, and conflicting decisions can be grounds for reversal.

This judgment clarifies the scope of overtime eligibility for supervisors in government-owned printing and minting corporations and sets a precedent for similar cases involving government employees and labor laws. The Supreme Court’s decision underscores the importance of considering the specific service rules applicable to government employees and the distinction between government service and private employment when determining overtime eligibility.