Date of the Judgment: April 18, 2023
Citation: (2023) INSC 388
Judges: V. Ramasubramanian, J., Pankaj Mithal, J.
The Supreme Court of India addressed whether supervisors in government-owned printing and minting facilities are entitled to double overtime pay under the Factories Act, 1948. This case involved a long-standing dispute over the interpretation of labor laws and service rules, specifically concerning employees of the Security Printing & Minting Corporation of India. The bench comprised Justices V. Ramasubramanian and Pankaj Mithal, with the majority opinion authored by Justice V. Ramasubramanian.
Case Background
The case involves a dispute over overtime allowances for supervisors in various government-owned printing and minting facilities. Before 2006, these facilities were under the Ministry of Finance, Government of India. In 2006, the Security Printing & Minting Corporation of India Ltd. (the Corporation) was formed to manage these units. This transfer included the existing workforce and ongoing legal disputes.
In 1988, the Ministry of Finance issued an order granting a special allowance in lieu of overtime to non-gazetted supervisory staff. However, a subsequent order in 2000 stated that employees with a basic pay exceeding Rs. 2,200 per month would not be entitled to overtime. This led to multiple legal challenges.
Several groups of supervisors filed writ petitions and original applications before the Central Administrative Tribunal (CAT) and the High Court of Judicature at Bombay, seeking overtime allowances. The matter was remanded multiple times between the High Court and the Tribunal, with conflicting decisions being made. Ultimately, the High Court ruled in favor of the supervisors, prompting the Corporation to appeal to the Supreme Court.
Timeline
| Date | Event |
|---|---|
| 1988 | Ministry of Finance issues order for special allowance in lieu of overtime for non-gazetted supervisory staff. |
| 21.12.1988 | Order issued by the Special Officer (Currency & Coinage), Department of Economic Affairs, Ministry of Finance, Government of India, directing that the shop-floor and the ministerial staff, falling under the category of non-gazetted supervisory staff of the Presses and Security Paper Mill would be compensated for extended hours of work at certain rates. |
| 11.04.2000 | Government of India clarifies that staff with basic pay exceeding Rs. 2,200 per month will not be entitled to overtime allowance. |
| 1988 | A group of supervisors files a writ petition in the High Court of Judicature at Bombay, claiming overtime allowance. |
| 1995 | The writ petition is transferred to the Central Administrative Tribunal. |
| 25.07.1997 | Central Administrative Tribunal dismisses the applications, stating it lacks jurisdiction over overtime claims under the Factories Act, 1948. |
| 2000 | Another group of supervisors files an application in O.A. No.26 of 2000 before the Central Administrative Tribunal, claiming the same reliefs. |
| 19.01.2001 | Central Administrative Tribunal dismisses O.A. No.26 of 2000, following the order passed on 25.07.1997. |
| 27.01.2005 | High Court remands the matter (A.K. Biswas and others) back to the Tribunal for a fresh consideration. |
| 04.04.2005 | Tribunal allows the application filed by A.K. Biswas and others. |
| 31.01.2006 | High Court sets aside the Tribunal’s order and remands the matter back to the Tribunal for a second time. |
| 13.01.2006 | ‘Security Printing & Minting Corporation of India Ltd.’ is incorporated. |
| 10.02.2006 | Transfer of management of nine production units to the Corporation. |
| 15.09.2006 | The Tribunal dismisses O.A. No.26 of 2000 filed by A.K. Biswas and others. |
| 09.06.2010 | Central Administrative Tribunal holds that the applicants were entitled to Double Over Time Allowance in terms of Section 59(1) of the Factories Act, 1948, for a period of two years prior to the filing of the respective original applications. |
| 28.06.2018 | High Court of Judicature at Bombay dismisses the writ petitions filed by the Union of India and the Corporation and allows the writ petition filed by A.K. Biswas and others, granting relief only to those employees who had not compromised the matter with the management. |
| 18.04.2023 | Supreme Court allows the appeals and sets aside the impugned order of the High Court. |
Course of Proceedings
The initial writ petition filed in 1988 was transferred to the Central Administrative Tribunal in 1995. The Tribunal initially dismissed the claims, stating it lacked jurisdiction under the Factories Act, 1948. However, the High Court remanded the matter back to the Tribunal multiple times for reconsideration. The Tribunal then reached contradictory decisions, granting overtime to one group of supervisors while denying it to another group, despite both groups performing similar duties. The High Court, in its final order, sided with the supervisors, leading to the present appeal before the Supreme Court.
Legal Framework
The case revolves around the interpretation of key provisions of the Factories Act, 1948, and the Maharashtra Factories Rules, 1963.
- Section 2(m) of the Factories Act, 1948: Defines “factory.” The Tribunal presumed that the India Security Press, Currency Note Press, and India Government Mint fall under this definition.
- Section 2(l) of the Factories Act, 1948: Defines “worker.” The Tribunal also presumed that the employees in question fall under this definition.
-
Section 59(1) of the Factories Act, 1948: States that workers are entitled to extra wages for overtime work.
“Where a worker works in a factory for more than nine hours in any day or for more than forty-eight hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.”
-
Section 64(1) of the Factories Act, 1948: Empowers the State Government to make rules exempting certain categories of workers from the provisions of Chapter VI of the Act.
“The State Government may make rules defining the persons who hold positions of supervision or management or are employed in a confidential position in a factory, and the provisions of this Chapter (other than the provisions of section 66) shall not apply to any person so defined.”
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Rule 100 of the Maharashtra Factories Rules, 1963: Exempts supervisors from the application of Chapter VI of the Factories Act, 1948, provided they do not perform manual labor or clerical work as a regular part of their duties.
“In a factory the following persons shall be deemed to hold position of supervision or management within the meaning of sub-section (1) of section 64, provided they are not required to perform manual labour or clerical work as a regular part of their duties namely: (x) Foreman, Chargeman, Overseer and Supervisor;”
The Supreme Court also considered the Administrative Tribunals Act, 1985, specifically Section 3(q), which defines “service matters” to include remuneration and allowances for government employees. The court noted that the employees’ claims arose when they were Central Government servants, making it a service matter.
The Court also considered the Fundamental Rules, particularly Rule 11, which states that a government servant’s whole time is at the disposal of the government, without claim for additional remuneration.
“Unless in any case it be otherwise distinctly provided, the whole time of a Government servant is at the disposal of the Government which pays him, and he may be employed in any manner required by proper authority, without claim for additional remuneration, whether the services required of him are such as would ordinarily be remunerated from general revenues, from a local fund or from the funds of a Body incorporated or not, which is wholly or substantially owned or controlled by the Government.”
Arguments
Appellants’ Arguments (Security Printing & Minting Corporation of India Ltd.):
- The supervisors’ job duties, as reflected in their Annual Confidential Reports (ACRs), show that they primarily perform supervisory duties, controlling 50 to 100 workers.
- The principle established in Burmah Shell Oil Storage and Distribution Company of India Ltd. vs. The Burma Shell Management Staff Association & Ors. [1970 (3) SCC 378] states that a person whose primary work is supervisory does not become a ‘workman’ simply because they also perform clerical or mechanical work incidental to their supervisory role.
- The Tribunal and the High Court did not properly understand the scope of Rule 100 of the Maharashtra Factories Rules, 1963.
- Supervisors, who earn higher salaries than workers, should not be entitled to the same overtime benefits as workers.
Respondents’ Arguments (Supervisors):
- The decision in Burmah Shell Oil Storage and Distribution Company of India Ltd. does not apply because the definition of “workman” under the Industrial Disputes Act, 1947, differs from the definition of “worker” under the Factories Act, 1948.
- The “dominant nature test” from the Burmah Shell case is not applicable here.
- The Tribunal and the High Court found that the supervisors perform manual labor or clerical work as a regular part of their duties, making Rule 100 of the Maharashtra Factories Rules, 1963, inapplicable.
- Findings of fact by a quasi-judicial tribunal should not be easily overturned.
- The proviso to Section 64(1) of the Factories Act, 1948, provides an exception for those earning wages below the limit specified in Section 1(6) of the Payment of Wages Act, 1936, regarding overtime work.
- The Central Administrative Tribunal has previously ruled in favor of similarly situated supervisors.
| Main Submission | Sub-Submissions |
|---|---|
| Appellants’ Submission: Supervisors primarily perform supervisory duties and are not entitled to overtime. |
|
| Respondents’ Submission: Supervisors are entitled to overtime due to the nature of their work and legal provisions. |
|
Innovativeness of the argument: The respondents innovatively argued that the definition of “workman” under the Industrial Disputes Act, 1947, differs from the definition of “worker” under the Factories Act, 1948, thus making the dominant nature test inapplicable.
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether persons employed as Supervisors are entitled to Double Over Time Allowance in terms of Section 59(1) of the Factories Act, 1948?
Treatment of the Issue by the Court
The following table demonstrates how the Court decided the issues:
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether persons employed as Supervisors are entitled to Double Over Time Allowance in terms of Section 59(1) of the Factories Act, 1948? | No | The Court held that supervisors, being holders of civil posts, are governed by service rules and not solely by the Factories Act. The Tribunal and High Court did not consider the distinction between government and private service, and the effect of statutory rules. The court found that the Tribunal reached diametrically opposite findings of fact in respect of persons holding similar supervisory posts. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How Considered | Legal Point |
|---|---|---|---|
| Burmah Shell Oil Storage and Distribution Company of India Ltd. vs. The Burma Shell Management Staff Association & Ors. [1970 (3) SCC 378] | Supreme Court of India | Distinguished | The Court distinguished the definition of “workman” under the Industrial Disputes Act, 1947, from the definition of “worker” under the Factories Act, 1948, finding the case inapplicable. |
| Section 2(m) of the Factories Act, 1948 | N/A | Considered | Definition of “factory” |
| Section 2(l) of the Factories Act, 1948 | N/A | Considered | Definition of “worker” |
| Section 59(1) of the Factories Act, 1948 | N/A | Considered | Entitlement to extra wages for overtime work. |
| Section 64(1) of the Factories Act, 1948 | N/A | Considered | Power of State Government to make exempting rules. |
| Rule 100 of the Maharashtra Factories Rules, 1963 | N/A | Considered | Exemption of supervisors from Chapter VI of the Factories Act, 1948. |
| Section 3(q) of the Administrative Tribunals Act, 1985 | N/A | Considered | Definition of “service matters” |
| Rule 11 of the Fundamental Rules | N/A | Considered | Government servant’s whole time at disposal of the government. |
| Section 2(s) of the Industrial Disputes Act, 1947 | N/A | Considered | Definition of “workman” |
| Section 1(6) of the Payment of Wages Act, 1936 | N/A | Considered | Applicability of the Act based on wage limits. |
Judgment
| Submission by Parties | How the Court Treated the Submission |
|---|---|
| Appellants’ submission that supervisors primarily perform supervisory duties and are not entitled to overtime. | The Court agreed that the supervisors’ duties were primarily supervisory, and they were not entitled to overtime under the Factories Act, 1948, due to their status as government employees. |
| Respondents’ submission that supervisors are entitled to overtime due to the nature of their work and legal provisions. | The Court disagreed, stating that the supervisors’ employment was governed by service rules and not solely by the Factories Act, 1948. The Court also found that the Tribunal and High Court did not consider the distinction between government and private service, and the effect of statutory rules. |
| Authority | How the Court Viewed the Authority |
|---|---|
| Burmah Shell Oil Storage and Distribution Company of India Ltd. [1970 (3) SCC 378] | The Court distinguished this case, noting that the definition of “workman” under the Industrial Disputes Act, 1947, differs from the definition of “worker” under the Factories Act, 1948, making the case inapplicable. |
| Section 2(m) of the Factories Act, 1948 | The Court acknowledged the definition of “factory” but did not base its decision on this. |
| Section 2(l) of the Factories Act, 1948 | The Court acknowledged the definition of “worker” but noted that supervisors were not solely governed by this definition due to their status as government employees. |
| Section 59(1) of the Factories Act, 1948 | The Court acknowledged the provision for overtime wages but stated it was not applicable to the supervisors in this case due to their status as government employees. |
| Section 64(1) of the Factories Act, 1948 | The Court acknowledged the power of the State Government to make exempting rules, referencing Rule 100 of the Maharashtra Factories Rules, 1963. |
| Rule 100 of the Maharashtra Factories Rules, 1963 | The Court found that this rule exempted supervisors from overtime provisions, provided they did not perform manual or clerical work as a regular part of their duties. |
| Section 3(q) of the Administrative Tribunals Act, 1985 | The Court used this to establish that the matter was a service matter, as it related to the remuneration and allowances of government employees. |
| Rule 11 of the Fundamental Rules | The Court used this to emphasize that government servants are at the disposal of the government, without claim for additional remuneration. |
| Section 2(s) of the Industrial Disputes Act, 1947 | The Court distinguished this definition of “workman” from the definition of “worker” under the Factories Act, 1948. |
| Section 1(6) of the Payment of Wages Act, 1936 | The Court found this section inapplicable as the respondents’ basic pay exceeded the limit mentioned in the section. |
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the distinction between government service and private employment. The Court emphasized that government employees, unlike those in private factories, are governed by specific service rules and are expected to be available for duty at all times. The Court also noted the contradictory findings of fact by the Tribunal, which could not be reconciled. The Court also highlighted the fact that the claim of the respondents was not based on any statutory rule but based entirely upon Section 59(1) of the 1948 Act.
| Sentiment | Percentage |
|---|---|
| Distinction between Government and Private Service | 40% |
| Contradictory Findings by Tribunal | 30% |
| Applicability of Service Rules | 20% |
| Lack of Statutory Basis of Claim | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
The Court’s reasoning was heavily influenced by legal considerations, particularly the interpretation of service rules and the Factories Act.
Logical Reasoning
Issue: Are Supervisors entitled to Double Over Time Allowance under Section 59(1) of the Factories Act, 1948?
Step 1: Determine if the employees are covered by the Factories Act, 1948, as ‘workers’ under Section 2(l).
Step 2: Consider if the supervisors are exempted under Section 64(1) read with Rule 100 of the Maharashtra Factories Rules, 1963.
Step 3: Examine if the supervisors perform manual or clerical work, making the exemption inapplicable.
Step 4: Analyze if service rules and the status of employees as government servants impact applicability of the Factories Act, 1948.
Step 5: Conclude that supervisors, as government employees, are governed by service rules and not solely by the Factories Act, 1948, thus not entitled to overtime under Section 59(1).
The Court rejected the argument that the supervisors’ performance of certain functions, such as setting right malfunctioning machinery, constituted manual labor. The Court also rejected the argument based on the proviso to Section 64(1) of the Factories Act, 1948, finding it inapplicable to the respondents.
The Supreme Court’s decision was unanimous, with both Justices V. Ramasubramanian and Pankaj Mithal agreeing on the final verdict. The court stated:
“Thus, we find (i) that the Tribunal as well as the High Court did not consider the distinction between persons in Government service and those in private service and the effect of the statutory rules upon the conditions of service of the respondents, including their liability to work for extra hours ; (ii) that the Tribunal reached diametrically opposite findings of fact in respect of persons holding similar supervisory posts; and (iii) that therefore, the orders of the Tribunal and the High Court are unsustainable.”
“In the light of the above Rule, there was actually no scope for the respondents to seek payment of Double Over Time Allowance. It is needless to say that no benefit can be claimed by anyone dehors the statutory rules.”
“Persons holding civil posts or in the civil services of the State enjoy certain privileges and hence, the claim made by the respondents ought to have been tested by the Tribunal and the High Court, in the proper perspective to see whether it is an attempt to get the best of both the worlds.”
Key Takeaways
- Government employees are primarily governed by service rules, not labor laws like the Factories Act, 1948.
- Supervisors in government-owned facilities are not automatically entitled to overtime pay under the Factories Act, 1948.
- The “dominant nature test” used in industrial disputes may not apply to government service.
- Tribunals and High Courts must consider the distinction between government and private employment when deciding service-related matters.
- Courts must also consider the effect of the statutory rules upon the conditions of service of the employees, including their liability to work for extra hours.
Directions
The Supreme Court directed that no recovery should be made from those employees who had already received payments.
Development of Law
The ratio decidendi of the case is that government employees, particularly those holding civil posts, are primarily governed by service rules and not solely by labor laws such as the Factories Act, 1948. This clarifies that the entitlement to overtime pay for government employees is contingent upon their specific service rules and not merely on the provisions of labor laws. This decision establishes that the nature of employment, whether in government or private sector, significantly affects the applicability of labor laws. This decision also highlights the importance of considering the effect of statutory rules upon the conditions of service of the employees, including their liability to work for extra hours.
Conclusion
The Supreme Court allowed the appeals, setting aside the High Court’s order and clarifying that supervisors in government printing units are not entitled to double overtime allowance under the Factories Act, 1948, due to their status as government employees and the applicability of service rules. The Court emphasized the distinction between government and private employment and the importance of statutory service rules in determining the conditions of service for government employees.